Please see the Open Consultations and Exposure Drafts section below for more details.

 

2. IAASB Issues ISA 610 (Revised), Using the Work of Internal Auditors
 

The International Auditing and Assurance Standards Board (IAASB) released International Standard on Auditing (ISA) 610 (Revised), Using the Work of Internal Auditors, which addresses the external auditor’s responsibilities if using the work of an internal audit function in obtaining audit evidence. The revised standard is aimed at enhancing the external auditor’s performance by providing a more robust framework for evaluating and using the work of an entity’s internal audit function. Related changes have also been made to ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment, to explain how the internal audit function and its findings can usefully inform the external auditor’s risk assessments. Both ISA 610 (Revised) and ISA 315 (Revised) are effective for audits of financial statements for periods ending on or after December 15, 2013.

 

In revising ISA 610, the IAASB also agreed on requirements and guidance that specify the conditions and establish responsibilities of the external auditor if the external auditor intends to use internal auditors to provide direct assistance during the audit. It intends to incorporate such material in ISA 610 (Revised) only after the International Ethics Standards Board for Accountants (IESBA) concludes its deliberations on its February 2012 Exposure Draft of proposed changes to the definition of “engagement team” in the Code of Ethics for Professional Accountants (IESBA Code). The IESBA Exposure Draft proposes to resolve a perceived inconsistency between the ISAs and the IESBA Code regarding the ability of external auditors to use internal auditors to provide direct assistance.

 

 

 

Policy Position Paper 4, Public Sector Financial Management Transparency and Accountability: The Use of International Public Sector Accounting Standards, sets out IFAC’s view that governments around the world must provide clear and comprehensive information regarding the financial consequences of economic, political, and social decisions, in order to protect the public as well as investors in government bonds. Transparency and accountability can only be provided through a high-quality, robust, and effective accrual-based financial reporting system, which allows for government assets and liabilities (including debt) to be appropriately recorded, reported, and disclosed—and hence effectively monitored.

 

The most globally accepted high-quality accrual-based financial reporting system is the International Public Sector Accounting Standards (IPSASs), issued by the International Public Sector Accounting Standards Board (IPSASB), an independent standard-setting board supported by IFAC.

 

 

 

The International Auditing and Assurance Standards Board (IAASB) released International Standard on Related Services (ISRS) 4410 (Revised), Compilation Engagements, addressing engagements in which professional accountants in public practice assist in the preparation and presentation of an entity’s financial information. ISRS 4410 (Revised) clarifies the practitioner’s role and responsibilities in a compilation engagement and matters that need to be considered when accepting such engagements, and emphasizes the importance of quality control. It also expands the traditional compilation engagement report to make clear to users the practitioner’s contribution to the compiled financial information presented by management, and the key features of a compilation engagement. The revised standard is effective for compilation engagement reports dated on or after July 1, 2013.

 

 

The revised Policy Position Paper 2, A Single Set of Auditing Standards: Audits Of Small- And Medium-Sized Entities, reaffirms IFAC’s view that a single set of auditing standards that can be applied to all audits is in the public interest. The policy position paper was first issued by IFAC in 2008; the main revisions to the position paper include updated references to: the Clarified ISAs; other standards that the IAASB has issued and that are relevant to small and medium practitioners; and tools and guidance made available to practitioners by IFAC and the IAASB.

 

Members of the IFAC Member Body Development team were recently invited to present at a World Bank Financial Management Team of the Africa Region meeting, held in Washington, D.C. The meeting gathered 45 members of the World Bank staff who work across the African continent. IFAC staff gave a presentation on the IFAC Compliance Program, the Statements of Membership Obligations (SMOs) as a framework for a high-quality accountancy profession, and the current status of the profession throughout Africa. In response to a request from the World Bank, IFAC staff highlighted the key themes in each SMO and the action plan process as well as support tools available from IFAC staff. The World Bank expressed their interest in how they could support the implementation of IFAC SMOs and action plans on the ground in individual nations. The meeting also included an open discussion that focused on the different ways the Compliance Program and the World Bank Financial Management Team can increase collaboration.

 

 

 

IFAC’s Seminar on the sovereign debt crisis, held March 19-20, 2012, was a significant first step. Key decision makers, and public finance management leaders from across the globe assembled in Vienna—attendees had the opportunity to network with our venerable speakers and guests. As the impact of the sovereign debt crisis continues to create turmoil in the global economy, the Seminar covered the crisis’ many causes and the reform needed now. Please visit the post-conference site for more information and to view presentations.

 

 

 

Delegates from 40 professional accountancy organizations in 36 countries met in Singapore for the sixth annual IFAC Small and Medium Practices (SMP) Forum on March 19, 2012. Co-hosted with the Institute of Certified Public Accountants of Singapore (ICPAS), this year’s event featured a keynote address by Ms. Jessica Tan, Chairman of the Government Parliamentary Committee for Finance and Trade & Industry in Singapore. During the day-long event, delegates discussed the hot-button challenges facing the SMP sector and collaborated on the solutions on a global level. The agenda and select presentations are available at 2012 IFAC Small and Medium Practices Forum.

 

 

Ian Ball, IFAC’s Chief Executive Officer, recently attended the Global Reporting Initiative (GRI)’s inaugural conference on Sustainability and Integrated Reporting in Melbourne, Australia. Mr. Ball delivered a presentation on Integrated Reporting and a Sustainable Economy, which detailed how past crises like Enron and the present global financial crises have paved the way for increasing transparency and the need for a more sustainable approach to financial reporting. The presentation will be available on the IFAC website soon.

 

Open Consultations and Exposure Drafts
 

 

The International Ethics Standards Board for Accountants (IESBA) has released Proposed Changes to the Code of Ethics Definition of “Engagement Team” which addresses comments received by the International Auditing and Assurance Standards Board on its Exposure Draft (ED) on International Standards on Auditing (ISA) 610, Using the Work of Internal Auditors. A number of respondents to that ED pointed out the perceived inconsistency between the independence requirements for external auditors under the Code of Ethics for Professional Accountants and the use of internal auditors to perform external audit procedures. The IESBA invites all stakeholders to comment on its proposals. Comment Deadline: May 31, 2012.

 

 

The International Public Sector Accounting Standards Board (IPSASB) has issued the following Exposure Draft and Consultation Papers:
 

? Reporting Service Performance Information discusses the IPSASB view that service performance information is necessary to meet the objectives of financial reporting, which are to provide information that is useful to users of General Purpose Financial Reports for accountability and decision making. The project also aims to present a principles-based approach to developing a consistent framework for public sector entities. IPSASB also released an At a Glance summary for this Consultation Paper. Comment Deadline: April 15, 2012
 

? Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities: Presentation in General Purpose Financial Reports (CF-CP4) explores concepts applicable to the presentation of information in the general purpose financial reports of public sector entities. It is not limited to the financial statements. The Consultation Paper describes what is meant by presentation of information, and explains that presentation covers both display and disclosure. It reviews an approach to presentation of information that involves: presentation objectives based on user needs; application of the qualitative characteristics to presentation decisions; and three presentation concepts. IPSASB also released an At a Glance summary of the material in the Consultation Paper. Comment Deadline: May 31, 2012
 

? Exposure Draft (ED) 47, Financial Statement Discussion and Analysis proposes minimum required content while still providing sufficient flexibility for entities to prepare and publish financial statement discussion and analysis that best portrays their specific circumstances. ED 47 includes implementation guidance and an illustrative example that shows how an entity might prepare its financial statement discussion and analysis to comply with the proposed requirements. IPSASB also released an At a Glance summary for this Exposure Draft. Comment Deadline: July 31, 2012