Over 50 senior audit professionals from 23 international networks of accounting firms met today to contribute their perspectives on proposed revisions to auditor reporting. The symposium, organized by the Forum of Firms, assembled a group of experts to discuss the proposals outlined in the International Auditing and Assurance Standards Board (IAASB)’s public consultation, Invitation to Comment: Improving the Auditor’s Report (ITC).

Participants representing various jurisdictions and network sizes lent a variety of perspectives to the lively debate on the ITC proposals. “The symposium gave us the opportunity to collectively gain a deeper understanding of the proposals and consider the practical implications for implementation and related consequences for audit quality. The interactions raised awareness while also providing a unique opportunity for direct practitioner interaction with the IAASB on a topic that runs to the core of the auditing profession,” said David Maxwell, chair of the Transnational Auditors Committee.

Each panel discussion commenced with an overview of the existing landscape, overall summary of the relevant ITC proposals, and early indicative feedback collected by the IAASB to date. The first of two panels, Auditor Commentary—Moving Beyond Boilerplate, then explored the proposal to add a section to the standard auditor’s report on auditor commentary. The second panel, Going Concern and Other Information—Making Auditors’ Implicit Messages Explicit, focused on the call from investors to provide more information about the auditor’s responsibilities. The symposium concluded with an opportunity for participants to give their reactions to the remainder of the ITC’s proposals and the likelihood they will achieve the goal of making financial statement users understand more about the audit.

"The auditor’s report is a critical outcome from the audit, playing an important role in public confidence in audited financial statements. The Forum of Firms welcomes open discussion and debate that will contribute to enhanced audit quality,” said Robert Dohrer, chair, Forum of Firms. “It is essential that all audit firms be engaged in the global debate on audit quality so that we can consider how we, as practitioners, can better contribute to its advancement.”

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 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.

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. It is comprised of 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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In support of its commitment to explore standards for services that meet the unique needs of small- and medium-sized entities (SMEs), the International Auditing and Assurance Standards Board (IAASB) today released International Standard on Review Engagements (ISRE) 2400 (Revised), Engagements to Review Historical Financial Statements. ISRE 2400 (Revised) follows the release earlier in 2012 of International Standard on Related Services (ISRS) 4410 (Revised), Compilation Engagements, a standard also addressing services of particular relevance to SMEs.

“An important aspect of the IAASB’s strategic focus in recent years has been our response to the growing demand for assurance services, other than the financial statement audit, that help enhance the credibility of SMEs’ financial statements,” noted Prof. Arnold Schilder, IAASB chairman. “In light of this demand, it is fundamental that there be robust standards to support a diverse range of services for this important stakeholder group. ISRE 2400 (Revised) is an important contribution to this aim.”

Review engagements are of particular relevance for entities that are not required, or do not elect, to have an audit, but wish to enhance the credibility of, and confidence in, their unaudited financial statements among their users through practitioner involvement. The practitioner’s report when a review engagement has been conducted in accordance with ISRE 2400 (Revised) describes whether anything has come to the practitioner's attention that causes the practitioner to believe the financial statements are not prepared, in all material respects, in accordance with the applicable financial reporting framework. A review is a limited assurance engagement, however, and the procedures performed are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing. Accordingly, the practitioner's review engagement report does not express an audit opinion on the financial statements.

“This standard enhances both the value and performance of review engagements. Through strengthened requirements and additional guidance, it helps ensure there is sufficient appropriate evidential support for the practitioner’s conclusion on the financial statements and further promotes high-quality engagements,” explained James Gunn, IAASB technical director.

The revised standard is effective for reviews of financial statements for periods ending on or after December 31, 2013. An At a Glance publication provides an overview of the revised standard.

About the IAASB
The IAASBdevelops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by IFAC.

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 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The International Federation of Accountants (IFAC), the global organization for the accountancy profession, today issued Policy Position Paper 6, Global Regulatory Convergence and the Accountancy Profession.

Continued efforts to sustain global regulatory convergence are critical for the evolution of a sound, global financial system. Convergence assists in providing solutions to problems highlighted by the global financial crisis and contributes to greater economic certainty and financial stability. To be effective, global convergence requires the support of a broad range of key stakeholders—including politicians, governments, regulatory bodies, and professional accounting organizations—at the national and international levels.

“Global convergence is a significant issue in the current debate about regulatory reform and responses to the financial and sovereign debt crises,” said IFAC Chief Executive Officer Ian Ball. “Crucially, convergence helps users compare financial information, minimizes the effects of systemic economic risks, reduces information costs, and decreases opportunities for regulatory arbitrage.”

IFAC believes that the global public interest is best served by consistent global adoption and implementation of high-quality, internationally accepted financial reporting, auditing, assurance, public sector accounting, accounting education, and ethics standards (including independence requirements for auditors), and by use of these standards for reporting financial information for capital and debt markets. The process of convergence involves national and regional standard setters and regulators either adopting international standards or modifying their own standards to achieve consistency with agreed global norms.

In addition, the public interest is served when regulatory arrangements involving auditor registration and licensing requirements, the public oversight of auditors of public interest entities, and arrangements that promote greater cross-border trade-in-services are globally consistent and based on cooperation and mutual recognition.

“Successful global solutions require national governments and regulators to avoid the temptation to implement legislative and regulatory reforms without considering the global agenda, and without a serious commitment to cooperating with national and international counterparts,” continued Mr. Ball. "Reforms that have extra-territorial impacts, or regulatory actions that require entities to potentially violate or bypass the laws of other countries, exacerbate current problems in the global financial system."

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 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The International Ethics Standards Board for Accountants (IESBA) today released for public exposure new requirements that address a professional accountant’s responsibilities regarding the disclosure of suspected illegal acts committed by a client or employer. The proposals describe the circumstances in which a professional accountant is required or expected to breach confidentiality, one of the five fundamental principles in the Code of Ethics for Professional Accountants (the Code), and disclose the act to an appropriate authority.

The Exposure Draft (ED), Responding to a Suspected Illegal Act, proposes adding two new sections addressing illegal acts to the Code—one each for professional accountants in public practice and professional accountants in business—and several revisions to other related sections. The new sections clearly delineate the expected course of action for a professional accountant to take if those charged with governance do not respond to the issue appropriately.

“Breaching confidentiality is not something to be taken lightly,” said Jörgen Holmquist, chair of the IESBA. “However, when the consequences of non-disclosure are potentially harmful to individuals or society, confidentiality must be overridden. Accountants have an important role to play in protecting the public interest and enabling authorities to take appropriate action.”

How to Comment
The IESBA invites all stakeholders to comment on its proposals in the ED, Responding to a Suspected Illegal Act. To submit a comment, visit the IESBA website at www.ethicsboard.org. Comments on the ED are requested by December 15, 2012.

About the IESBA
The International Ethics Standards Board for Accountants (IESBA) is an independent standard-setting board that develops and issues, in the public interest, high-quality ethical standards and other pronouncements for professional accountants worldwide. Through its activities, the IESBA develops the Code of Ethics for Professional Accountants, which establishes ethical requirements for professional accountants. The structures and processes that support the operations of the IESBA are facilitated by IFAC. Please visit www.ethicsboard.org for more information.

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. It is comprised of 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The International Ethics Standards Board for Accountants (IESBA) today released for public exposure a proposed change to the definition of “those charged with governance” in the IESBA Code of Ethics for Professional Accountants (the Code).

The objectives of the change are to more closely align the definition of “those charged with governance” in the Code with that in the IAASB’s International Standard on Auditing (ISA) 260, Communication with Those Charged with Governance, and to eliminate any confusion as to how it is defined. The IESBA is of the opinion that the proposals do not call for any change in systems or common practice, should they be approved.

The change specifically aims to clarify that a subgroup, such as an audit committee, may assist the governing body in meeting its responsibilities. In those cases, the auditor shall determine with whom within the entity’s governance structure to communicate.

“Through this Exposure Draft, the IESBA seeks to ascertain whether the proposed change to the definition adequately clarifies the term ‘those charged with governance.’ The IESBA believes this will contribute to more consistent application of the Code, which is critical to our mission to support the global adoption and implementation of the Code,” said Ken Dakdduk, chair of the IESBA.

How to Comment
The IESBA invites all stakeholders to comment on its proposals in the Exposure Draft, Proposed Change to the Definition of “Those Charged with Governance.” To submit a comment, visit the IESBA website at www.ethicsboard.org. Comments on the Exposure Draft are requested by October 31, 2012.

About the IESBA
The International Ethics Standards Board for Accountants (IESBA) is an independent standard-setting board that develops and issues, in the public interest, high-quality ethical standards and other pronouncements for professional accountants worldwide. Through its activities, the IESBA develops the Code of Ethics for Professional Accountants, which establishes ethical requirements for professional accountants. The structures and processes that support the operations of the IESBA are facilitated by IFAC. Please visit www.ethicsboard.org for more information.

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 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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Complexity and pace of change of regulations, in particular tax requirements, topped the list of challenges faced by small- and medium-sized accountancy practices (SMPs) and their small business clients in the first half of 2012, according to the SMP Quick Poll results released today by IFAC.

Keeping up with new regulations and pressure to lower fees were the top two challenges for practitioners. Their clients face similar challenges, according to the SMPs polled, with burden of regulation topping the list and three economic factors—pressure to lower prices, economic uncertainty, and difficulties accessing finance—nearly tied as the next biggest challenges.

“The results are critical to IFAC and its member bodies gaining a deeper understanding of the challenges and opportunities faced by SMPs globally,” said SMP Committee Chair Giancarlo Attolini. “We were very pleased with the high response rate to this survey, which is testimony to the fact that our member bodies, who heavily promoted the poll, are just as concerned about SMPs as we are.”

The poll also included questions on business drivers and outlook. For nearly half the respondents, business from new clients is the main driver of growth by a wide margin with less than half as many respondents citing increased revenue from existing clients as their main driver of growth. However, when asked about performance expectations, the largest portion of practitioners expect no change in business in the current year compared with 2011.

See the complete report including selected results broken down by size of practice and region in the IFAC SMP Quick Poll: May–June Results.

The mid-year 2012 poll received 3,678 responses, 50% more than the last edition of the poll in December 2011. The poll, intended to take a snapshot of key challenges and trends influencing SMPs globally, was conducted in 15 languages from May 7 to June 14, 2012. IFAC wishes to thank the many member bodies and regional organizations that translated and/or helped promote the poll to their members.

About the SMP Committee
The SMP Committee of the International Federation of Accountants (IFAC) represents the interests of professional accountants operating in small- and medium-sized practices (SMPs). The committee develops guidance and tools and works to ensure the needs of the SMPs are considered by standard setters, regulators, and policy makers. The committee also speaks out on behalf of SMPs to raise awareness of their role and value, especially in supporting SMEs, and the importance of the small business sector overall.

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 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The International Public Sector Accounting Standards Board (IPSASB) today released for comment the Consultation Paper, Consultation on IPSASB Work Program 2013–2014. This is the first public consultation by the IPSASB on its work program. It signals the IPSASB’s intent to continue this practice and consult publicly on future work programs.

This public consultation is limited to the work program for the period 2013–2014. This is because the IPSASB is currently in a period of significant activity and transition. The Public Sector Conceptual Framework project, the IPSASB’s highest priority project, is scheduled to be completed in 2014. In addition it is anticipated that public interest oversight and related governance changes for the IPSASB will be implemented in 2014–2015.

"This first public consultation on the IPSASB’s work program for 2013–2014 will assist the IPSASB in creating a short-term work program that meets stakeholders’ needs. In fact we see this as a first step to a broader and even more fundamental public consultation of our broad strategic direction in the future," explained IPSASB Chair Andreas Bergmann.

How to Comment
To access the Consultation Paper or to submit a comment, please visit the IPSASB website at https://www.ifac.org/public-sector. Comments on the Consultation Paper are requested by October 31, 2012. The IPSASB encourages IFAC members, associates, and regional accountancy bodies to promote the availability of this Consultation Paper to their members and employees.

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both financial and in-kind) from the World Bank, the Asian Development Bank, and the governments of Canada, China, New Zealand, and Switzerland.

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 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The International Federation of Accountants (IFAC) today announced the availability of the 2012 editions of the handbooks from the International Auditing and Assurance Standards Board (IAASB), International Ethics Standards Board for Accountants (IESBA), and International Public Sector Accounting Standards Board (IPSASB).

2012 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements
The 2012 edition includes two new standards: ISAE 3410—Assurance Engagements on Greenhouse Gas Statements and ISAE 3420—Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus. It also includes IAPN 1000—Special Considerations in Auditing Financial Instruments, and revised versions of the Preface, ISA 315—Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment, ISA 610—Using the Work of Internal Auditors and conforming amendments to other ISAs as a result of this revision, and ISRS 4410—Engagements to Compile Financial Statements. It will be available in July and can be pre-ordered here.

2012 Handbook of the Code of Ethics for Professional Accountants
The 2012 edition includes a new introduction and editorial amendments. It will be available in July and can be pre-ordered here.

2012 Handbook of International Public Sector Accounting Pronouncements
The 2012 edition includes a new standard: IPSAS 32, Service Concession Arrangements: Grantor. IPSAS 32 is effective for annual financial statements covering periods beginning on or after January 1, 2014. The 2012 handbook also incorporates the amendments made as a result of the IPSASB’s 2011 Improvements Project, as well as a revised Terms of Reference and Preface to International Public Sector Accounting Standards. The IPSASB handbook is currently available and can be ordered here.

The material contained in the handbooks was developed by the IAASB, IESBA, and IPSASB, respectively. The structures and processes that support the operations of these independent standard-setting boards, including publishing the handbooks, are facilitated by IFAC.

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 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The International Federation of Accountants (IFAC), the global organization for the accountancy profession, today issued Position Paper 5, A Definition of the Public Interest.

A hallmark of the accountancy profession is its obligation to act in the public interest. But it is not always apparent what this means, and how accountants can determine whether they are meeting this expectation. IFAC, by developing this position paper, is seeking to advance its understanding of this important issue. The paper, which presents a practical definition of the public interest, was developed in the context of IFAC’s mission, to enable IFAC to assess the extent to which its actions and decisions are made in the public interest.

In light of the challenges presented by prevailing market and economic conditions, policy makers, regulators, standard setters, professional accountants, and others in the financial system are examining their roles, responsibilities, and actions; and therefore it is timely to consider the basis on which these actions are taken, and decisions made.

“IFAC developed this definition of the public interest to assist us in evaluating whether our actions and decisions are in fact in the public interest,” said IFAC CEO Ian Ball. “Whether we are using it to develop public policy positions, professional standards, or guidance and tools, we believe the definition provides rigor, objectivity, and consistency in assessing the important public interest perspective of our work. It applies not only to evaluating past and current actions and decisions; but also guides our behavior and the manner in which we assess future actions and decisions. We believe that the definition may also be relevant to other organizations and individuals that seek to act in the public interest, and feel the need for increased rigor in evaluating their actions and decisions.”

The development of the position paper included a public consultation process. Comments and feedback received from a range of stakeholders in the accountancy profession, regulatory community, and academia were considered, and incorporated into the final paper. “While we consulted widely on this policy position paper before issuing it, we continue to invite dialogue on the subject,” continued Ball. “Clearly it is a complex subject, and we hope that this paper is the beginning, rather than the end, of the debate.” 

IFAC welcomes comments on this paper to: PubInt@ifac.org

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 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC) has issued new International Good Practice Guidance, Evaluating and Improving Internal Control in Organizations, highlighting areas where the practical application of existing internal control standards and frameworks often fails in many organizations.

“Sound internal control practices that are continuously adapted to changing circumstances are critical for organizations,” said Roger Tabor, chair of the PAIB Committee. “Organizations are most successful when they can take advantage of opportunities and defend against threats, both of which are enabled by an appropriate system of internal control.”

The new guidance will assist professional accountants in business as they work with their organizations to continuously evaluate and improve internal control, and ensure that it is an integrated part of the organization’s systems of governance and risk management. Better integrated internal controls can save the organization time and money while helping to create and preserve value.

“Organizations need to evaluate and review their internal controls at all levels and within all functions to continue to achieve their objectives,” said Henny Kapteijn, chair of the PAIB Committee’s Risk Management and Internal Control Task Force. “A Professional accountant in business, armed with this guidance, can help lead his or her organization through this process to ensure ongoing, effective internal control.”

About International Good Practice Guidance
International Good Practice Guidance (IGPG) issued by the PAIB Committee cover areas of international and strategic importance in which professional accountants in business are likely to engage. In issuing principles-based guidance, IFAC seeks to foster a common and consistent approach to those aspects of the work of professional accountants in business not covered by international standards. IFAC seeks to clearly identify principles that are generally accepted internationally and applicable to organizations of all sizes in commerce, industry, education, and the public and not-for-profit sectors. Previously issued IGPGs are available on the IFAC website, including Preface to IFAC’s International Good Practice Guidance.

About the PAIB Committee
The PAIB Committee serves IFAC member bodies and professional accountants worldwide who work in commerce, industry, financial services, education, and the public and the not-for-profit sectors. Its aim is to promote and contribute to the value of professional accountants in business by increasing awareness of the important roles professional accountants play, supporting member bodies in enhancing the competence of their members, and facilitating the communication and sharing of good practices and ideas.

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 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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