The IAASB has recently completed the first phase of the IAASB's ambitious 18-month program to redraft existing standards and to develop new and revised standards following the new drafting conventions. For more information about the IAASB Clarity Project, go to http://www.ifac.org/IAASB/ProjectHistory.php?ProjID=0024.
The object of redrafting the ISAs is to make them more readily understood, applied and enforced. Key elements of the clarity drafting conventions include: establishing an objective for the auditor with respect to the subject matter of each standard; clearly distinguishing requirements from guidance on their application; avoiding ambiguity through eliminating the present tense to describe actions by the auditor and using more imperative language where a requirement was intended; and other structural and drafting improvements to enhance the overall readability and understandability of the standards.
The IAASB is on track to complete the Clarity project by the end of 2008. When completed, 32 ISAs as well as International Standard on Quality Control 1 will have been redrafted. Subject to any comments on exposure, the final standards will become effective for audits of financial statements for periods beginning on or after December 15, 2009. Redrafted ISAs currently on exposure can be viewed by going to http://www.ifac.org/EDs.
While welcoming many aspects of this project the IFAC SMP Committee is concerned about the increased number of requirements and its impact on the cost of conducting an SME audit. We welcome your views, in particular:
- Do you believe the redrafted ISAs will increase the cost to complete an SME audit? If yes, by approximately what percentage?
- Do you believe the redrafted ISAs will improve the quality of SME audits?
- Do you believe any benefits from the redrafted ISAs (in terms of improved quality audits) will outweigh any additional costs of completing an SME audit?