International Auditing and Assurance Standards Board

IAASB Strategic Review

Alta Prinsloo, Deputy Director, IAASB

Steering Committee INTOSAI Professional Standards Committee April 23-24, 2007

Strategy Review

Consultation Plan

• • • Survey (January / February) Review of reports of audit oversight and other bodies Discussions with identified groups, including INTOSAI PSC Steering Committee and IAASB CAG • • • Invited forums – April 13, Sydney – June 28, Brussels Presentations at IAASB meetings Exposure draft – October 2

Survey

Responses

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138 responses

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Many responses from organizations, rather than individuals 3

Survey

Respondents

IFAC Member Body 29% Standards Setter Professional Accountant in Public Practice Member or TA of IFAC Board or Committee 14% 18% 18% Academia 11% IAASB CAG Member Organization/Representative 11% Public Sector IAASB Member User of Financial Statement Small and Medium Sized Practice 11% 10% 8% 8% 4

Survey

Respondents

Preparer of Financial Statements Private Sector Regulator Developing / Emerging Economy Governmental or Legislative Body IAASB Technical Advisor Audit Oversight Body Small and Medium Sized Entity Donor Agency or Similar Body Other 8% 8% 6% 6% 6% 5% 3% 2% 1% 1% 5

Survey

Most Affected Groups (Weighted)

Auditors Users of financial statements (other than regulators) National standards setters Audit oversight bodies Securities and other regulators IFAC member bodies Preparers of financial statements Regional professional accounting organizations Other 0% 3% 4% 5% 7% 10% 13% 11% 10% 16% 15% 15% 20% 21% 25% 6

Survey

Affected Groups - Other

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Others include: – Academia (educational institutions, educators, students, researchers) – Public sector (government, tax authorities, politicians) – Legislators and courts 7

Survey

Environmental Factors (Weighted)

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Credibility of financial reporting and the worldwide accountancy profession Convergence with international standards Application of standards by SMPs Regulation of the worldwide accountancy profession The expectations gap New needs of information users Corporate credibility The audit performance gap 8

Survey

Initiatives

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99% of respondents indicated that the following should remain the IAASB’s top initiatives: – Development of standards – Global acceptance, convergence and partnership – Communications

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No significant new initiatives were identified 9

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Development of Standards – Recommendations

Assist with the implementation of ISAs Develop standards for other assurance engagements Complete current projects / consider matters relating to recently completed ISAs Redraft standards other than ISAs in clarity style Revise ISAs that were redrafted, but not revised Develop a conceptual framework Develop the meaning of “reasonable assurance” Consider qualitative characteristics or behavioral aspects of an auditor On-line business reporting / XBRL 10

Survey

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Matters for Consideration

Do you agree with the recommendations on the previous slide?

Do you agree with the order of importance?

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Survey

ISAs – Recommendations

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Assist with implementation of the ISAs – Establish a period in which no new ISAs will become effective – ISA implementation guidance • SMEs and emerging economies • Industry specific guidance – Post-implementation review of clarity redrafted ISAs 12

Survey • • •

Matters for Consideration

Respondents supported establishing a period in which no new ISAs become effective. Do you agree? How long should this period be?

Is there scope for releasing new standards in blocks – say, every 3 years?

How should issues relating to the implementation of ISAs in the public sector be identified?

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Survey

ISAs – Recommendations

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Revise ISAs redrafted but not revised as part of Clarity project – ISA 250 – ISA 720 14

Survey

Matters for Consideration

• • How should the recommended revisions of ISAs 250 and 720 be prioritized?

From a public sector perspective, are there any other redrafted but not revised ISAs that should be revised? How should their revisions be prioritized?

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Survey

Other Standards – Recommendations

• • • Develop standards for other assurance engagements – Reporting on internal control and risk management – Reporting on sustainability reports – Auditor’s involvement in prospectuses, including prospective and pro forma financial information and comfort letters Redraft ISREs, ISAEs and ISRSs in clarity style Address conceptual issues (i.e., framework, reasonable assurance) 16

Survey • • • •

Matters for Consideration

Is the list of recommended standards for assurance engagements complete?

How should the recommended projects be prioritized?

How should a project to develop a conceptual framework be prioritized?

What aspects relating to the qualitative characteristics or behavior of an auditor should be considered?

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Survey

Global Acceptance – Recommendations

• • Continue to identify and address impediments to convergence Continue dialogue with those affected by the IAASB’s activities – SMEs / SMPs and emerging economies – National standard setters – INTOSAI – International regulators and audit oversight bodies – Jurisdictions that have not yet indicated intention to adopt the ISAs 18

Survey

Global Acceptance – Recommendations

• • Drive implementation by utilizing – Regional organizations – IFAC member bodies – National standard setters – Forum of Firms Facilitate – Translations – Training – Exchange of experiences 19

Survey •

Matter for Consideration

The responses supported continuing to put weight on this activity, but it was not clear what should be done in addition to what is already in place. Is there anything further that the IAASB should consider?

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Survey

Communication – Recommendations

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Increase and target communication Develop communication strategy Develop project updates, summaries of key points and implications of new/revised standards

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Create an awareness amongst investors and the wider public as to what an audit is 21

Survey

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Matter for Consideration

Who should be the IAASB’s principal targets for communication, and what should be communicated?

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International Federation of Accountants www.ifac.org

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