The International Federation of Accountants (IFAC) supports recent moves by the International Accounting Standards Board (IASB) to contribute to greater consistency in financial reporting and to work towards convergence of international standards, an objective which IFAC views as critical to the efficient operation of global capital markets.

While accepting the value of moving rapidly to remove differences in the application of fair value accounting in different jurisdictions, IFAC strongly opposes attempts to change more radically, or to suspend, the use of fair value accounting without adequate due process. In particular, IFAC considers that making changes at a national or regional level that exacerbate reporting differences would serve to further confuse financial markets and would result in a reduction of confidence in financial reporting - exactly the opposite of what is required in current circumstances. "Reducing transparency is not the answer," says IFAC President Fermín del Valle, "and it will not serve the interests of investors."

IFAC believes that the additional guidance given to those applying both accounting and auditing standards relating to fair values has been very valuable and will contribute to the public interest through more consistent application of the standards. This guidance has come from the IASB and the United States Financial Accounting Standards Board, as well as from the International Auditing and Assurance Standards Board in its Staff Audit Practice Alert, Challenges in Auditing Fair Value Accounting Estimates in the Current Market Environment.

IFAC and its independent standard-setting boards are continuing to monitor the impact of the credit crisis and will consider whether further guidance is needed.

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 and jurisdictions, 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. For more information about IFAC, visit its website at www.ifac.org.

Over 60 partners from 21 international networks of accounting firms met yesterday to share their experiences, industry insights and current practices for audits of financial institutions at a symposium on the Audit of Financial Institutions organized by the Forum of Firms.  Several panels of experts were assembled with the support of the six large networks to lead discussions on various topics including valuation and impairment, liquidity, market confidence, and going concern.

"This event was an initiative by the Forum of Firms to examine current practice in addressing the auditing and financial reporting issues resulting from the current events in the market and to consider the International Auditing and Assurance Standards Board (IAASB's) latest guidance in this area," states David Devlin, Symposium Chair.

The symposium included a review of current accounting and auditing guidance issued in response to the credit crisis.  Symposium participants noted particularly the IAASB's new Staff Audit Practice Alert - Challenges in Auditing Fair Value Accounting Estimates in the Current Market Environment.  This is relevant to audits of all entities that have investments in financial instruments, especially those in illiquid markets.

The symposium concluded with a discussion of specific auditing responses appropriate in audits of financial statements of financial institutions.  These include the importance of strong risk management and transparent disclosure for restoring market confidence as well as heightened sensitivity to going concern issues.

 "This symposium was designed to disseminate good practice in an area of critical importance in today's environment and to support the Forum's members in providing the highest quality audit services to their clients and the public," points out David Maxwell, chair of the Forum of Firms.

About the Forum of Firms
The Forum of Firms is an association of networks of international accounting firms that perform transnational audits. Members of the Forum have committed to adhere to and promote the consistent application of high quality audit practices worldwide, including the use of International Standards on Auditing, and the maintenance of appropriate quality control standards in accordance with International Standards on Quality Control issued by the International Auditing and Assurance Standards Board. Through their organizations, members also conduct globally coordinated internal quality assurance reviews on a regular basis and have policies and methodologies that conform to the International Federation of Accountants' Code of Ethics for Professional Accountants. The Transnational Auditors Committee is the Executive Committee of the Forum of Firms and a committee of the International Federation of Accountants.

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

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 and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. The organization, through its independent standard-setting boards, sets international ethics, auditing and assurance, education, and public sector accounting standards. IFAC also issues guidance to encourage high quality performance by professional accountants in business.

To assist auditors in addressing the challenges of auditing fair value accounting estimates, the staff of the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), today released an audit practice alert. The alert was developed following consultation with the IAASB's Task Force on Fair Value Auditing Guidance, which is considering the need for new or modified guidance in light of current marketplace issues.

The purpose of the alert is to highlight areas within the International Standards on Auditing (ISAs) that are particularly relevant in the audit of fair value accounting estimates in times of market uncertainty.

James Sylph, Executive Director, Professional Standards, noted, "Recent events in some of the world's largest financial markets continue to call attention to the difficulties in establishing fair values. This Staff Audit Practice Alert responds to calls from the Financial Stability Forum and others for further guidance on the audit of fair value accounting estimates. I believe this alert will be relevant to auditors of entities of all sizes as they prepare for the next audit season."

The alert also directs auditors to the recently revised ISA 540 (Revised and Redrafted), Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures, which was influenced by the changes in the credit markets during 2007. While not effective until audits of financial periods commencing on or after December 15, 2009, it includes guidance that is likely to be useful to auditors planning their 2008 engagements.

The practice alert, Challenges in Auditing Fair Value Accounting Estimates in the Current Market Environment, may downloaded free of charge from the IFAC website (www.ifac.org). For more information on the other IAASB initiatives with regard to fair value, please visit http://www.ifac.org/IAASB/ProjectHistory.php?ProjID=0080.

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.

The International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), today released seven International Standards on Auditing (ISAs) following the consideration and approval of due process by the Public Interest Oversight Board (PIOB). The ISAs are in the new style following the conventions developed in the IAASB's project to improve the clarity, and therefore the application, of its standards. Some of the standards released today have been substantively revised, while others have been redrafted to apply the new conventions. The standards will provide further momentum toward achieving convergence and contribute to enhancing understanding of the purpose and scope of audits, and their effective conduct.

The New Standards

The clarified ISAs include ISA 200 (Revised and Redrafted), Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing. This fundamental ISA contains an overview of an audit to aid in understanding its purpose and scope; defines the respective authority of the requirements and guidance in ISAs; and contains the most fundamental requirements for auditors. It emphasizes the importance of sound and consistent professional judgment by the auditor, and the necessity for sufficient audit evidence to support the auditor's opinion.

John Kellas, IAASB Chairman, explained, "The issuance of ISA 200 (Revised and Redrafted) is a milestone for the IAASB in that it codifies the principles underpinning the interpretation of standards drafted using the clarity conventions. As the overarching standard to all other ISAs, ISA 200 (Revised and Redrafted) establishes the basic objective and obligations of the auditor, and sets out how the objectives, requirements and guidance in all ISAs are to be understood."

In addition to ISA 200 (Revised and Redrafted), the IAASB also released:

• ISA 320 (Revised and Redrafted), Materiality in Planning and Performing an Audit;
• ISA 450 (Revised and Redrafted), Evaluation of Misstatements Identified during the Audit;
• ISA 530 (Redrafted), Audit Sampling;
• ISA 610 (Redrafted), Using the Work of Internal Auditors;
• ISA 705 (Revised and Redrafted), Modifications to the Opinion in the Independent Auditor's Report; and
• ISA 706 (Revised and Redrafted), Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report.

"In clarifying the ISAs, the IAASB aimed to eliminate any possible ambiguity within the extant standards and to drive more consistent application by auditors. The revisions released today in particular upgrade the standards in the important areas of materiality and misstatements and reporting by the auditor," noted Mr. Kellas.

These ISAs form part of the IAASB's program to redraft existing standards following the clarity drafting conventions. * To date, the IAASB has released 22 final clarity redrafted ISAs. The IAASB is on track to finalize its complete set of clarified ISAs by the end of this year. All clarified ISAs will be effective from a single date, for audits of financial statements for periods beginning on or after December 15, 2009.

The ISAs can be downloaded free-of-charge from the IFAC online bookstore at 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.

* Key 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 Federation of Accountants (IFAC) today issued a policy position titled IFAC's Support for a Single Set of Auditing Standards: Implications for Audits of Small and Medium-sized Entities. The paper sets out IFAC's view that International Standards on Auditing (ISAs) are designed to be applicable to audits of financial statements of entities of all sizes, and highlights the ways in which the International Auditing and Assurance Standards Board (IAASB) considers the needs and perspectives of small- and medium-sized entities (SMEs) in the development of those standards.

The paper emphasizes that the consistent use of the ISAs is essential to meeting the public interest expectations of an audit. If auditors intend to issue an ISA audit report, they must comply with the ISAs. This enables a consistent level of assurance to be associated with the word "audit," and allows users to make decisions in the light of a common understanding about the reliability of financial statements. The paper also emphasizes the importance of professional judgment in determining the most effective approach for a particular audit.

The paper points out that SMEs have an alternative to obtaining an audit; they may obtain a review of their financial statements. International Standard on Review Engagements 2400, Engagements to Review Financial Statements, requires a different level of work effort by the practitioner and results in a different and lower level of assurance. The IAASB will be considering changes to this standard in light of the current needs of the marketplace. A new consultation paper, commissioned by the IAASB and developed by staff of several national auditing standard setters, seeks input on the elements that would provide a relevant and cost-effective assurance service that is an alternative to an audit for SMEs in particular. IFAC encourages the broader accountancy community to assist the work of the IAASB by responding to this consultation paper.*

All IFAC policy positions may be downloaded from the IFAC website by going to http://www.ifac.org/Store/.

About IFAC
IFAC (http://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. 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. The organization, through its independent standard-setting boards, sets international ethics, auditing and assurance, education, and public sector accounting standards. IFAC also issues guidance to encourage high quality performance by professional accountants in business.

*The Consultation Paper, Matters to Consider in a Revision of International Standard on Review Engagements 2400, Engagements to Review Financial Statements, can be accessed at http://www.ifac.org/ED.

The International Public Sector Accounting Standards Board (IPSASB), an independent standard-setting board of the International Federation of Accountants (IFAC), has issued for comment the first in a series of consultation papers focused on the development of an international public sector conceptual framework. Entitled Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities, the consultation paper represents a landmark achievement for the public sector financial reporting community.

The consultation paper identifies the IPSASB's preliminary views on the objectives and scope of financial reporting, the qualitative characteristics of information included in general purpose financial reports and the characteristics of public sector reporting entities. 

 "Our ultimate goal is to develop a framework that makes explicit the concepts, definitions, and principles that underpin the development of IPSASs," states IPSASB Chair Mike Hathorn. "Since it will apply across countries and jurisdictions with different political systems and forms of government, the framework will recognize the diversity that exists in the many jurisdictions that may adopt IPSASs and help to strengthen the transparency and consistency of financial reporting by governments worldwide. This makes receiving a broad spectrum of comments on this paper, and all our consultation papers, all the more significant."

"Given the important role the conceptual framework will eventually play in the future standard-setting activities of the IPSASB, I strongly urge constituents to respond to the views expressed in this milestone paper," adds Mr. Hathorn.

How to Comment
Comments on the consultation paper are requested by March 31, 2009. It may be viewed and downloaded by going to http://www.ifac.org/Guidance/EXD-Details.php?EDID=0119. Comments may be submitted by email to EDComments@ifac.org. They can also be faxed to the attention of the IPSASB Technical Director at +1 (416) 977-8585, or mailed to the IPSASB Technical Director at 277 Wellington Street West, 6th Floor, Toronto, Ontario M5V 3H2, Canada.   All comments will be considered a matter of public record and will ultimately be posted on the IFAC website.

About IFAC

IFAC (http://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. 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 Federation of Accountants (IFAC) today released a consultation paper Matters to Consider in a Revision of International Standard on Review Engagements (ISRE) 2400, "Engagements to Review Financial Statements" developed by staff from the national auditing standard setters of New Zealand (Professional Standards Board), Canada (Auditing and Assurance Standards Board), and South Africa (Independent Regulatory Board for Auditors). It is expected that the responses to this paper will assist the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of IFAC, in its consideration of a relevant and cost-effective assurance service that is an alternative to an audit for small- and medium-sized entities in particular.

The paper, commissioned by the IAASB, focuses on a number of significant matters relevant to a revision of ISRE 2400, including the nature and extent of the work a practitioner should perform in an engagement to review financial statements, and how the level of assurance obtained should best be communicated to users.  It also raises numerous discussion points. In so doing, it helps to accelerate the IAASB’s work to revise ISRE 2400, a project that is included in the IAASB's Strategy and Work Program for 2009-2011.

"We are grateful for this collaborative effort on the part of auditing standard setters in South Africa, Canada, and New Zealand, and encourage practitioners, other national auditing standard setters, national professional accountancy bodies, end users of review services, and others with an interest in alternative assurance services, to review and respond to the issues discussed in this paper," emphasizes Jim Sylph, IFAC Executive Director, Professional Standards. "The preliminary input in response to this paper will help guide the Board’s work and enable it to address in a timely and efficient manner the needs of users, practitioners and other stakeholders for robust and appropriate standards," he adds.

How to Comment
Comments on the consultation paper are requested by December 15, 2008. The paper may be downloaded from the IFAC website at http://www.ifac.org/EDs. Comments on the consultation paper may be sent to reviewengagements@ifac.org. They may also be faxed to James M. Sylph, IFAC Executive Director, Professional Standards, at +1-212-286-9570 or mailed to him at 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 the IFAC website

About the IAASB
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.

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 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 ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

The International Public Sector Accounting Standards Board (IPSASB), an independent standard-setting board within the International Federation of Accountants (IFAC), is seeking comments on its proposed changes to IPSAS 5, Borrowing Costs, set forth in exposure draft (ED) 35, Borrowing Costs (Revised 200X). 
 
"Public sector entities borrow for a variety of reasons, most of which are unrelated to asset acquisition," said Mike Hathorn, Chair of the IPSASB. "The IPSASB concluded that requiring public sector entities to capitalize borrowing costs as part of the cost of qualifying assets would not satisfy the qualitative characteristics of general purpose financial reporting, particularly related to the reliability of information reported. The immediate expensing of these borrowing costs instead will enhance the accountability of public sector entities." 

Most notably, ED 35 proposes amendments to reflect that in many circumstances the capitalization of borrowing costs as part of the cost of an asset is not appropriate for public sector entities.  This view, a departure from both IPSAS 5 and International Accounting Standards Board's International Accounting Standard 23, Borrowing Costs, is an evolution from public sector consideration of the issue.  The ED proposes that entities recognize borrowing-related expenses, such as interest or loan origination fees, during the period in which they are incurred. The ED also proposes, however, that where entities borrow funds specifically to acquire, construct or produce a qualifying asset, the entity has the option to capitalize those costs as part of the cost of that asset.

ED 35 may be viewed and downloaded by going to http://www.ifac.org/EDs. The IPSASB values the public's opinion and welcomes comments on its decision to require entities to expense borrowing costs, except in the circumstances outlined.

How to Comment
Comments on ED 35 are requested by January 7, 2009, and may be submitted via email at EDcomments@ifac.org.  Comments can also be faxed to the attention of the IPSASB Technical Director at +1 (416) 977-8585, or mailed to the IPSASB Technical Director at 277 Wellington Street West, 6th Floor, and Toronto, Ontario M5V 3H2, Canada. All comments will be considered a matter of public record and, ultimately, will be posted on the IFAC website.

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. 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.

SMS Latinoamérica has been named a full member of the Forum of Firms after reporting it has implemented a globally coordinated quality assurance program, committed to the use of International Standards on Auditing (ISAs), and met other specific ethics requirements, the Forum announced today. Seventeen other international networks of accounting firms achieved full member status earlier this year. A list of the Forum's members is attached.

The Forum of Firms 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.

In order to achieve full membership status, SMS Latinamérica had to commit to meet the Forum's membership obligations which require members to:

• Maintain 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 conduct, to the extent not prohibited by national regulation, regular globally coordinated internal quality assurance reviews;
• Have policies and methodologies for the conduct of transnational audits that are based, to the extent practicable, on ISAs issued by the IAASB; and
• Have policies and methodologies which conform to the IFAC Code of Ethics for Professional Accountants and national codes of ethics.

As of July 2008, of the 22 Forum members, 18 are full members and four are provisional members. The Forum's remaining provisional members are working toward becoming full members in 2008. For additional details on the Forum of Firms, please visit: http://www.ifac.org/Forum_of_Firms/.