On September 29, 2008 IFAC released a consultation paper Matters to Consider in a Revision of International Standard on Review Engagements (ISRE) 2400, "Engagements to Review Financial Statements" developed by staff from the national auditing standard setters of New Zealand (Professional Standards Board), Canada (Auditing and Assurance Standards Board), and South Africa (Independent Regulatory Board for Auditors). The paper may be downloaded from the IFAC website at http://www.ifac.org/ED.
It is expected that the responses to this paper will assist the International Auditing and Assurance Standards Board (IAASB) in its consideration of a relevant and cost-effective assurance service that is an alternative to an audit for small- and medium-sized entities in particular.
The paper, commissioned by the IAASB, focuses on a number of significant matters relevant to a revision of ISRE 2400, including the nature and extent of the work a practitioner should perform in an engagement to review financial statements, and how the level of assurance obtained should best be communicated to users. It also raises numerous discussion points. In so doing, it helps to accelerate the IAASB's work to revise ISRE 2400, a project that is included in the IAASB's Strategy and Work Program for 2009-2011.
"We are grateful for this collaborative effort on the part of auditing standard setters in Australia, Canada, and New Zealand, and encourage practitioners, other national auditing standard setters, national professional accountancy bodies, end users of review services, and others with an interest in alternative assurance services, to review and respond to the issues discussed in this paper," emphasizes Jim Sylph, IFAC Executive Director, Professional Standards. "The preliminary input in response to this paper will help guide the Board's work and enable it to address in a timely and efficient manner the needs of users, practitioners and other stakeholders for robust and appropriate standards," he adds.
The comment period closed on December 15, 2008. The responses, so far 14, will soon be posted to http://www.ifac.org/Guidance/EXD-Outstanding.php and then analyzed. You may wish to express your views right here on this discussion board.
You may also wish to read about the American Institute of Certified Public Accountants' (AICPA's) Accounting and Review Services Committee (ARSC) Reliability Project. This makes some radical proposals on how to revamp the review engagement. The aim is to enable CPAs to perform limited assurance engagements for clients when the external CPA performs certain control services. The accountant would still be precluded from providing any assurance service when he or she has a financial or relationship interest in the company. It is expected that current compilation and review standards will be maintained. The ARSC plans to expose a new standard in the spring of 2009. For more information, visit the AICPA's Web site. We would be very happy to hear any comments you may have.