The IAASB invites you to listen in to a high-level roundtable discussion between global leaders, stakeholder groups and the IAASB addressing differences between public perceptions and the auditor’s responsibilities as well as feedback on the new and revised auditor reporting standards on September 28 at 8:15 am live streaming on YouTube. This roundtable, the second in part of an IAASB series, will:

• Consider the “expectation gap” with regards to fraud and going concern, which includes (among others) knowledge, performance, and evolution gaps;
• Stimulate discussions with stakeholders to better understand expectations for auditors in relation to fraud and going concern in financial statement audits, and explore how this “expectation gap” may be narrowed; and
• Gather stakeholder views on the implementation of the IAASB’s new and revised auditor reporting standards, including how practical challenges and concerns are being address and whether there is global demand for additional information in the auditor’s report to improve transparency.

Moderated by IAASB Deputy Chair Fiona Campbell, the September 28 roundtable participants, including governance experts, corporate directors, academics, auditors and audit profession leaders, audit regulators, and representatives from banking, investor and ratings groups will address, among other topics:

• The main causes of differences between public perception and auditor’s responsibilities with regard to fraud and going concern in audits of financial statements;
• What can be done across the external reporting ecosystem to address these differences; and
• New auditor’s reports, including Key Audit Matters (KAM) and if the IAASB standards issued in 2016 have increased confidence in audits.

This discussion will help the IAASB determine appropriate responses to global conversations on audit and the direction of future projects. It will also feed into the IAASB’s post-implementation review of the auditor reporting standards released in 2016, which includes the current auditor reporting survey for stakeholders. Stakeholders who are interested in these issues are encouraged to respond to the survey as well as read the recently released Discussion Paper on fraud and going concern.

We hope you are able to listen in to the group sessions on YouTube. We will also post the full sessions, including breakout small group discussion we aren’t able to live stream, online following the event—follow us on Twitter and YouTube or register/subscribe for updates and announcements.

Roundtable Agenda
September 28, 2020, 8:15-8:45 am EDT and 9:30-10:00 am EDT
IAASB YouTube

Save the date for the final IAASB roundtable in this series: 

IFAC, the global voice of the accountancy profession, today called for the creation of a new sustainability standards board that would exist alongside the IASB under the IFRS Foundation. The proposed board would address the urgent and growing demand from investors, policy makers and regulators for a reporting system that delivers consistent, comparable, reliable, and assurable information relevant to enterprise value creation, sustainable development and evolving stakeholder expectations.

IFAC’s overview of the objectives, structure and building blocks of the proposed board can be found at The Way Forward.

Kevin Dancey, CEO of IFAC, said, “The time for a global solution is now. Given the momentum that has developed this year—because of work by Accountancy Europe, WEF/IBC, the European Commission, the IOSCO Task Force and the five leading reporting initiatives—we have a unique opportunity to act in concert to do the right thing in the public interest. IFAC believes the IFRS Foundation, with the backing of public authorities, is optimally positioned to lead and coordinate this initiative, and they would do so with our full support. We recommend that the proposed board adopt a “building blocks” approach, working with and leveraging the expertise and disclosure requirements of the CDP, CDSB, GRI, IIRC and SASB.”

Veronica Poole, Global IFRS Leader and Head of Corporate Reporting at Deloitte, said: “Transparent measurement and disclosure of sustainability performance is a fundamental part of effective business management and is essential for preserving trust in business as a force for good. IFAC’s vision is fully aligned with the joint vision of the leading standard-setters on how their current standards and frameworks could complement IFRS Standards and US GAAP, and serve as a natural starting point for progress towards a more coherent, comprehensive corporate reporting system.”

“We now have a unique opportunity to accelerate progress and house all the relevant standards under one roof as suggested by IFAC, to connect sustainability disclosure standards focused on enterprise value creation to financial GAAP. Integrated reporting together with the IASB’s work on Management Commentary can provide a framework for this connectivity. IOSCO has stated its commitment to bring about the system change for the capital markets and the IFRS Foundation trustees indicated that they are going to consult on introducing a sustainability focused standard-setter under the umbrella of the IFRS Foundation—the stars are lining up to bring about the fundamental shift in reporting that investors, business and society at large have been calling for.”

Charles Tilley, IIRC Chief Executive Officer, said, “The IIRC has long championed a vision of a comprehensive and cohesive corporate reporting system to drive effective corporate governance and sustainable value creation. Bridging the gap between the two worlds of financial reporting and sustainability reporting is a vital element in fulfilling this vision and we support the development of a conceptual framework, based substantially on integrated reporting principles, to facilitate the linkages that will break down silos and restore trust.”

Barry Melancon, AICPA President and CEO, and IIRC Board Chair, added, “IFAC’s recommendations are powerful, coming out at a time when the world is in search of answers. This is an important moment for the IFRS Trustees, as businesses and investors need robust and trusted standards and interconnected oversight. A cohesive approach to reporting is not just more efficient, it is essential to unlock the positive force of value creation. We also need innovation to complete the corporate reporting system, to ensure we have an assurance process that is fit for purpose and the technology to support high quality reporting and governance.”

About IFAC
The International Federation of Accountants (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 comprises more than 175 members and associates in more than 130 countries and jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.

David Damant passed away in August 2020.

Mr. Damant’s career included decades of service in audit, accounting and investing and asset management. He was the first independent chair of the IAASB’s Consultative Advisory Group from 2004 to 2010. Upon his appointment, then-President of the International Federation of Accountants Rene Ricol said, “Damant has the experience and integrity to chair the IAASB CAG and present important public interest perspectives. High-quality auditing standards are needed in every part of the world to build investor confidence in capital markets. The support of independent regulators, users and preparers is critical to creating acceptance of the IAASB’s standards.”

During the course of his career, Mr. Damant was the president of the European Federation of Financial Analysts Societies, co-chairman of the International Council of Investment Associations and a member of the Board and Executive and Steering Committees of the International Accounting Standards Committee.

IFAC calls for the creation of a new sustainability standards board that would exist alongside the International Accounting Standards Board under the auspices of the IFRS Foundation. The proposed board would address the urgent and growing demand from investors, policy makers and regulators for a reporting system that delivers consistent, reliable, adaptable and assurable information relevant to enterprise value creation, sustainable development and evolving stakeholder expectations.

The International Auditing and Assurance Standards Board’s Audit Evidence Working Group has published a Project Update for International Standard on Auditing (ISA) 500, Audit Evidence. The Update includes details about its information gathering activities, issues identified to date, and the way forward for audit evidence. 

Based on its information gathering, the Audit Evidence Working Group developed an initial listing of possible issues and categorized the issues into three overarching topics:

• Changes in the source of information and how the information is processed, communicated, and used.
• Continual developments in technology.
• Professional skepticism.

The Audit Evidence Working Group is in the process of developing a project proposal for the IAASB’s consideration at its December 2020 meeting.

The IAASB’s Audit Evidence Working Group has published this Project Update for ISA 500, Audit Evidence, to update stakeholders about its information gathering activities, issues identified to date, and the way forward.

The International Standard on Auditing (ISA) 540 (Revised) Implementation Working Group today published illustrative examples for auditing expected credit loss (ECL) accounting estimates.

The examples illustrate how an auditor could address certain requirements of ISA 540 (Revised). They were developed to assist the auditor in understanding how ISA 540 (Revised) may be applied to:

• International Financial Reporting Standard (IFRS) 9 Impairment (ECL) – Credit Card
• IFRS 9 Impairment (ECL) – Significant Increase in Credit Risk
• IFRS 9 Impairment (ECL) – Macroeconomic Inputs and Data

The examples illustrate accounting estimates with varying characteristics and degrees of complexity. Each example illustrates a selection of requirements from ISA 540 (Revised). Not all requirements are addressed in each example, nor do they cover all parts of those requirements that have been selected. The requirements selected across each example vary to illustrate different aspects of ISA 540 (Revised) and to focus on those requirements that are most relevant to the example.

The three ECL examples are intended to be read together, as requirements that are addressed in one example may also be relevant to another example. For example, the Macroeconomic Inputs and Data example is focused primarily on the audit implications of such data, and does not repeat material in the other examples, which nevertheless may be relevant and applicable to that example more broadly.

These examples do not constitute an authoritative pronouncement of the International Auditing and Assurance Standards Board (IAASB), nor do they amend, extend or override the ISAs or other of the IAASB’s International Standards. It is not meant to be exhaustive and reading these examples is not a substitute for reading the ISAs.

Simple and complex illustrative examples, which demonstrate how an auditor may address selected requirements of ISA 540 (Revised) in the context of the audit of the financial statements of an entity with simple and complex accounting estimates, respectively, are also available.

This is the ninth installment of a 12-month publication series titled Exploring the IESBA Code. This installment addresses NOCLAR [for PAPPs]. 

To view all installments of Exploring the IESBA Code, visit the series landing page here.

For more information about the Code, click here.