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In this Issue:
1. Revised ISA 700 Enhances Transparency of Auditor's Report
In December 2004, the IAASB issued a revised ISA 700, The Independent Auditor's Report on a Complete Set of General Purpose Financial Statements, which enhances the transparency and comparability of an auditor's report across international borders. The new standard sets out a framework to separate audit reporting requirements in connection with an ISA audit from additional supplementary reporting responsibilities required in some jurisdictions.
The standard also sets out clear guidance to the auditor in those circumstances when the audit is conducted in accordance with both ISAs and the auditing standards of a specific jurisdiction and, in particular, on preparing an auditor's report to meet both the report structure required by the national jurisdiction and the requirements of the ISA. The revised ISA 700 is effective for auditor's reports dated on or after December 31, 2006, while related conforming amendments included in the document are effective for periods beginning on or after December 15, 2005. The new standard can be viewed by going to /store. It may be downloaded at no charge although simple registration information is required.
2. New Exposure Draft Addresses Audit Materiality
The IAASB has released a new exposure draft (ED): proposed International Standard on Auditing (ISA) 320 (Revised), Materiality in the Identification and Evaluation of Misstatements, which establishes standards and provides guidance on audit materiality and how it is used in identifying and evaluating misstatements when performing an audit of financial statements. The ED indicates that the auditor's judgment as to matters material to users of the financial statements is based on consideration of the needs of users as a group and not individual users whose needs may vary widely. The IAASB asks that comments be submitted by April 30, 2005. All IAASB EDs can be viewed by going to /EDs.
3. Another New Exposure Draft Addresses Audit of Accounting Estimates
The IAASB has also exposed proposed ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures (Other than Those Involving Fair Value Measurements and Disclosures). The ED provides guidance on auditing accounting estimates and related disclosures and conforms the approach to the IAASB's revised audit risk and fraud standards. The ED also addresses the difficult issue of bias in the preparation of financial statements. The comment period for this ED also ends on April 30, 2005.
4. Audit Documentation
The IAASB reminds those interested in commenting on its exposure draft proposed revised ISA 230, Audit Documentation that the comment period ends on January 31, 2005.
5. 2005 Handbook of Auditing and Ethics Pronouncements
The IAASB is currently finalizing the 2005 Handbook of International Auditing, Assurance, and Ethics Pronouncements. It includes IFAC's Code of Ethics for Professional Accountants and International Standards on Auditing, Assurance Engagements, Related Services and Quality Control as of December 31, 2004. The handbook will be available in PDF format on IFAC's website in early February and can be downloaded free-of-charge. The print version will be available by late February.
6. Updated Glossary of Terms for ISAs
The IAASB recently updated its Glossary of Terms to incorporate terms used in International Standards on Auditing issued as of October 31, 2004. The updated glossary can be downloaded from the IFAC bookstore: /store. A further update to the Glossary to incorporate terms used in International Auditing and Assurance Standards issued as of December 31, 2004 will be included in the 2005 edition of the handbook.
7. New Project Focuses on the "Work of an Expert"
At its December Meeting, the IAASB approved a new project to review ISA 620, Using the Work of an Expert. Working towards international convergence, the task force will consider recent developments in a number of national auditing standards. Issues to be addressed will include: the use of the work of experts with skills or knowledge in fields other than accounting and auditing; use of the work of experts in all phases of an audit of financial statements; the treatment of (a) experts employed by the audit firm, (b) members of the audit team with specialized skills or knowledge, and (c) client employees with specialized skills and knowledge; and whether under certain circumstances the auditor or management should contract an expert. An issues paper will be considered by the IAASB at its June 2005 meeting.
8. IAASB Withdraws IT-Related IAPSs
Due to continuing innovations in information technology (IT), the IAASB decided at its December meeting to withdraw four IT-related International Auditing Practice Statements (IAPSs). The following IAPSs, which the IAASB concluded contain IT concepts and terminology that are not in line with the latest developments, were withdrawn effective December 31, 2004:
9. Audio Recording of IAASB's December 2004 Meeting Available Online
The audio recording of the IAASB's December 2004 meeting in New Orleans may be downloaded from IFAC's website: /IAASB/Meetings.php?year=2004, beginning in mid-January.
10. Future Meetings
The next meeting of the IAASB will be held in Lima, Perú on March 7-11, 2005. Additional meetings in 2005 have been scheduled for June 13-17 in Rome, September 12-16 in New York, and December 5-9 in Cape Town.
11. 2005 IAASB Members
The 2005 members of the IAASB are: John Kellas, Chairman, Denise Esdon, Deputy Chair, Inga-Britt Ahlenius, Philip Ashton, Craig Crawford, Sukanta Dutt, Josef Ferlings, John Fogarty, Rogério Roberto Gollo, Jan Bo Hansen, Gen Ikegami, Ian McPhee, Will Rainey, Bodo Richardt, Roger Simnett, Roberto Tizzano, Gérard Trémolière and Mowafak Al Yafi.
For more information about these individuals, visit the IAASB website at http://www.iaasb.org.
For more information about any of the items mentioned above or other information about IAASB, please contact Alta Prinsloo, Senior Technical Manager, at altaprinsloo@ifac.org.
About IAASB and IFAC
The objective of the IAASB 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 IAASB is part of the International Federation of Accountants (IFAC), which is dedicated to serving the public interest, strengthening the worldwide accountancy profession, and contributing to the development of strong international economies. Its current membership consists of over 160 professional accountancy bodies in 119 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international auditing and assurance standards through the IAASB, IFAC sets ethics, education, and public sector accounting standards.