March 29, 2006
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In this Issue:
- IAASB Releases Proposed Standard on Group Audits
- Proposed New Standard Addresses Related Party Transactions
- Comments Sought on Assurance Aspects of Proposed New Sustainability Reporting Guidelines
- 2006 Handbook of Audit and Ethics Pronouncements Available
- China Announces Commitment to Convergence
- IAASB CAG Meetings Open to the Public
- IAASB Issues 2005 Annual Report
- Additional IAASB Meeting Scheduled in 2006
1. IAASB Releases Proposed Standard on Group Audits
To enhance the quality of audits of group financial statements, the International Auditing and Assurance Standards Board (IAASB) has issued a re-exposure draft of the proposed International Standard on Auditing (ISA) 600 (Revised and Redrafted), The Audit of Group Financial Statements. Following earlier consultations, the IAASB has modified the proposals and reissued the ED to address issues revolving around the extent to which the group auditor needs to be involved in the audits of components that are audited by other auditors, whether these auditors are independent of the group auditor (unrelated) or belong to the group auditor's national or international firm or network of firms (related auditors). The IAASB is also seeking comment on the application of the Clarity drafting conventions in the proposed standard.
Comments on the exposure draft are requested by July 31, 2006, and may be emailed to EDComments@ifac.org. The exposure draft can be downloaded at /EDs.
2. Proposed New Standard Addresses Related Party Transactions
The IAASB is also seeking comments on an exposure draft of proposed ISA 550 (Revised), Related Parties. The proposed standard places new emphasis on evaluating the effects of related party relationships and transactions on the financial statements, even in circumstances where the financial reporting framework does not establish related party accounting or disclosure requirements. In addition, the proposed revised ISA 550 would require the auditor to perform certain specified procedures in order to obtain an understanding of the nature and business rationale of an entity's related party relationships and transactions sufficient to identify, assess and respond to the risks of material misstatement resulting from them.
Comments on the exposure draft, which can be downloaded at /EDs, are requested by April 30, 2006.
3. Comments Sought on Assurance Aspects of Proposed New Sustainability Reporting Guidelines
The International Federation of Accountants (IFAC) has issued a consultation paper that explores assurance aspects in the Global Reporting Initiative's (GRI's) proposed new Sustainability Reporting Guidelines (G3). The consultation paper, Assurance Aspects of G3 - The Global Reporting Initiative's 2006 Draft Sustainability Reporting Guidelines, focuses on certain aspects of the G3 specific to accountants, including whether the proposed G3 would be suitable criteria for assurance engagements. It also seeks feedback on the application of the IAASB's International Standard on Assurance Engagements 3000 for sustainability reporting. The IFAC consultation paper can be downloaded at /store.
The proposed GRI guidelines can be viewed at http://www.grig3.org. Comments are requested by March 31, 2006, and can be submitted through the G3 website. IFAC requests that professional accountants and its member bodies also send a copy of their comments to michaelnugent@ifac.org. The comments will assist IFAC in understanding the views of professional accountants and in possible further action.
4. 2006 Handbook of Audit and Ethics Pronouncements Available
The 2006 edition of the Handbook of International Auditing, Assurance, and Ethics Pronouncements, which contains all the pronouncements of the IAASB as of December 31, 2005, and the IFAC Code of Ethics for Professional Accountants, is now available. The 2006 handbook is available as a PDF download; in print, for US$100 plus shipping; and in a searchable electronic eComPress download, for US$50. The print and eComPress versions are also available as a package for US$130 plus shipping.
To order the 2006 handbook, visit: /store.
5. China Announces Commitment to Convergence
At a release ceremony in Beijing on February 15, the Chinese Ministry of Finance announced China's commitment to international convergence with accounting and auditing standards and recognized the importance of these standards in building public confidence in financial statements.
Last December, the Chinese Auditing Standards Board (CASB) and the IAASB released a joint statement in which the CASB stated that the fundamental principle of drafting Chinese auditing standards is to improve the Chinese auditing standards system and to accelerate its convergence with the IAASB's International Standards on Auditing. Click here to read the joint statement.
6. IAASB CAG Meetings Open to the Public
The Consultative Advisory Group (CAG) to the International Auditing and Assurance Standards Board has announced that its meetings will now be open to the public. The IAASB CAG's next meeting is scheduled for May 11-12 in Paris. For more information on the IAASB CAG and to register to attend the next meeting, visit: /IAASB/About.php#ConsultativeAdvisoryGroup.
7. IAASB Issues 2005 Annual Report
The IAASB has issued its 2005 annual report. The report highlights major activities, including improving the clarity of international standards, promoting convergence, collaboration with national auditing standard setters and other initiatives. The report also includes an update from the chairman of the IAASB Consultative Advisory Group on its activities during the year. The 2005 annual report can be downloaded at /IAASB/Downloads/2005_IAASB_Annual.pdf. For print copies, email: pr@ifac.org.
8. Additional IAASB Meeting Scheduled for 2006
The IAASB has scheduled an extra meeting for 2006 in anticipation of an accelerated work program to address Clarity issues on additional International Standards on Auditing. The Clarity project seeks to improve the overall readability and understandability of IAASB standards through structural and drafting improvements and through removing the present tense from the standards to eliminate ambiguity about the obligations imposed on the auditor. The tentative date for the IAASB's extra meeting is October 25-27, 2006 in California, United States.
For more information about IAASB meetings, including background papers and to register to attend as a public observer, visit: /IAASB/Meetings.php.
For more information about any of the items mentioned above or other information about the IAASB, please contact: pr@ifac.org or visit the IAASB's homepage at http://www.iaasb.org.
About IAASB
The objective of the IAASB, an independent standard-setting board within IFAC, is to serve the public interest by setting high quality auditing and assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession. The Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes the criteria for its due process and working procedures.