Supporting the Implementation of International Standards – What’s Next?
One of the everyday concerns for many practitioners is effectively and efficiently implementing the international standards issued by the International Auditing and Assurance Standards Board (IAASB). Consistent application of these standards is crucial to the quality of audits and other assurance and related services. The IFAC SMP Committee has developed a suite of comprehensive guides and supplementary resources to help SMPs provide high-quality services, including:
Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities
Guide to Quality Control for Small- and Medium-Sized Practices
Guide to Review Engagements
These guides have been downloaded thousands of times in countries around the world, and up to 27 translated versions are also available. The SMP Committee is considering developing resources to support some of the other standards from the IAASB:
The IAASB’s International Standard on Related Services (ISRS) 4410, Compilation Engagements deals with the practitioner’s responsibilities when engaged to assist management with the preparation and presentation of historical financial information, without obtaining any assurance on that information. It may also be applied to compilation engagements for financial information other than historical financial information, and to compilation engagements for non-financial information. As with all international standards, it aims to promote consistency and minimize variations in practice due to the national equivalent standards used in some jurisdictions. As part of its proposed work program, the IAASB will conduct a post-implementation review of ISRS 4410, which has been effective for reports dated on or since July 1, 2013. The review will include a look at where it has been adopted and implemented globally as well as any implementation challenges.
Agreed-Upon Procedures (AUP)
The IAASB’s ISRS 4400, Engagements to Perform Agreed-Upon Procedures Regarding Financial Information applies to engagements to perform agreed-upon procedures regarding financial or non-financial information. The objective of an AUP is to carry out procedures of an audit nature to which the auditor and the entity and any appropriate third parties have agreed. Because the report is based upon factual findings, no assurance is expressed. Rather, the readers of the report form their own conclusions. The report is also not distributed publicly; it is restricted to those parties that have agreed to the procedures since others, unaware of the reasons for the procedures, may misinterpret the results.
The IAASB may revise ISRS 4400 to bring it into alignment with the clarified International Standards on Auditing (ISAs), given the increase in volume globally of this kind of engagement. The project may also include a consideration of “hybrid” engagements, in which both reasonable and limited assurance is provided together with an AUP and combined into one report.
Other Assurance Engagements
In addition, International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information is to be used by practitioners for the performance of assurance engagements not covered by ISAs or International Standards on Review Engagements (ISREs). The IAASB has also issued a number of subject-specific standards for assurance engagements, including ISAE 3400, The Examination of Prospective Financial Information, ISAE 3402, Assurance Reports on Controls at a Service Organisation, and ISAE 3410, Assurance Engagements on Greenhouse Gas Statements. These standards are all available as part of the IAASB’s Handbook of International Quality Control, Auditing Review, Other Assurance, and Related Services Pronouncements.
Assessing the Need for Additional Resources
As part of the IFAC SMP Committee’s commitment to supporting the implementation of international standards, we are considering what additional resources could most assist SMPs in efficiently and effectively implementing these standards. We invite you to share your experiences below on any particular challenges in implementing ISRS 4410, how you currently use Assurance and AUP engagements in your practice, and any resources you are aware of that address these standards.
Copyright June 2014 by the International Federation of Accountants (IFAC). All rights reserved. Used with permission of IFAC. Contact [email protected] for permission to reproduce, store, or transmit this document.