The publication assists auditors in understanding whether a procedure involving automated tools and techniques may be both a risk assessment procedure and a further audit procedure. It also provides specific considerations when using automated tools and techniques in performing substantive analytical procedures in accordance with International Standard on Auditing 520, Analytical Procedures. 

This publication does not amend or override the ISAs, the texts of which alone are authoritative. Reading the publication is not a substitute for reading the ISAs.

The Technology Working Group of the International Auditing and Assurance Standards Board (IAASB) today released non-authoritative support for using automated tools and techniques when performing audit procedures. 

The publication assists auditors in understanding whether a procedure involving automated tools and techniques may be both a risk assessment procedure and a further audit procedure. It also provides specific considerations when using automated tools and techniques in performing substantive analytical procedures in accordance with International Standard on Auditing 520, Analytical Procedures.

This publication does not amend or override the ISAs, the texts of which alone are authoritative. Reading the publication is not a substitute for reading the ISAs.

Following a vote by the IAASB during the last day of the September meeting, IAASB Chair Tom Seidenstein explains why the new quality management standards respond to:

• The changing environment;
• Challenge the effectiveness of the IAASB’s pre-existing quality control standards; and
• Growing market participant needs.

The resulting suite of standards are aimed at a more robust system of quality management for firms using the IAASB’s standards, and marks an evolution from a traditional, more linear approach to quality control.

     Read the Article on LinkedIn     

The International Auditing and Assurance Standards Board (IAASB) today opened a public consultation, Fraud and Going Concern in an Audit of Financial Statements: Exploring the Differences Between Public Perceptions About the Role of the Auditor and the Auditor’s Responsibilities in a Financial Statement Audit. The consultation will remain open until January 12, 2021. [Please note the comment period deadline has changed. The consultation will now remain open until Feb. 1, 2021.]

As the auditor’s role in relation to fraud and going concern in audits of financial statements continues to receive heightened public attention, amplified by high-profile corporate failures in recent years, the IAASB has recognized the need to further explore these topics. This Discussion Paper is aimed at gathering perspectives from a broad range of stakeholders across the financial reporting ecosystem about the role of the auditor in relation to fraud and going concern in an audit of financial statements. Stakeholders are asked for their perspectives on whether the auditing standards related to fraud and going concern need to be updated to reflect the rapidly evolving external reporting landscape, and, if so, in what areas.

“Issues related to fraud and going concern are consistently raised as areas requiring attention and potential improvement in order to enhance confidence in audits. These two topics are priorities in our recently issued strategy and work plan,” said IAASB Chair Tom Seidenstein. “This Discussion Paper is an important step in understanding the needs of users of financial reports, how changes in the financial reporting environment impact the role of the audit in terms of fraud and going concern, and the limitations of the existing standards.”

The feedback collected will inform decisions about possible further actions on these topics. The IAASB is also hosting a roundtable discussion on September 28 that will explore fraud and going concern expectations. The roundtable discussion will be live streamed on the IAASB’s YouTube channel, with un-aired breakout sessions shared via YouTube in October.

The IAASB invites all interested stakeholders to respond to this Discussion Paper, including, but not limited to, investors and other users of financial statements, those charged with governance of entities, preparers of financial statements, national standard setters, professional accountancy organizations, academics, regulators and audit oversight bodies, and auditors and audit firms.

Stakeholders can submit responses through the “Submit a Comment” button online.

About the IAASB
The IAASB develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.

The IAASB invites you to listen in to a high-level roundtable discussion between global leaders, stakeholder groups and the IAASB addressing differences between public perceptions and the auditor’s responsibilities as well as feedback on the new and revised auditor reporting standards on September 28 at 8:15 am live streaming on YouTube. This roundtable, the second in part of an IAASB series, will:

• Consider the “expectation gap” with regards to fraud and going concern, which includes (among others) knowledge, performance, and evolution gaps;
• Stimulate discussions with stakeholders to better understand expectations for auditors in relation to fraud and going concern in financial statement audits, and explore how this “expectation gap” may be narrowed; and
• Gather stakeholder views on the implementation of the IAASB’s new and revised auditor reporting standards, including how practical challenges and concerns are being address and whether there is global demand for additional information in the auditor’s report to improve transparency.

Moderated by IAASB Deputy Chair Fiona Campbell, the September 28 roundtable participants, including governance experts, corporate directors, academics, auditors and audit profession leaders, audit regulators, and representatives from banking, investor and ratings groups will address, among other topics:

• The main causes of differences between public perception and auditor’s responsibilities with regard to fraud and going concern in audits of financial statements;
• What can be done across the external reporting ecosystem to address these differences; and
• New auditor’s reports, including Key Audit Matters (KAM) and if the IAASB standards issued in 2016 have increased confidence in audits.

This discussion will help the IAASB determine appropriate responses to global conversations on audit and the direction of future projects. It will also feed into the IAASB’s post-implementation review of the auditor reporting standards released in 2016, which includes the current auditor reporting survey for stakeholders. Stakeholders who are interested in these issues are encouraged to respond to the survey as well as read the recently released Discussion Paper on fraud and going concern.

We hope you are able to listen in to the group sessions on YouTube. We will also post the full sessions, including breakout small group discussion we aren’t able to live stream, online following the event—follow us on Twitter and YouTube or register/subscribe for updates and announcements.

Roundtable Agenda
September 28, 2020, 8:15-8:45 am EDT and 9:30-10:00 am EDT
IAASB YouTube

Save the date for the final IAASB roundtable in this series: 

David Damant passed away in August 2020.

Mr. Damant’s career included decades of service in audit, accounting and investing and asset management. He was the first independent chair of the IAASB’s Consultative Advisory Group from 2004 to 2010. Upon his appointment, then-President of the International Federation of Accountants Rene Ricol said, “Damant has the experience and integrity to chair the IAASB CAG and present important public interest perspectives. High-quality auditing standards are needed in every part of the world to build investor confidence in capital markets. The support of independent regulators, users and preparers is critical to creating acceptance of the IAASB’s standards.”

During the course of his career, Mr. Damant was the president of the European Federation of Financial Analysts Societies, co-chairman of the International Council of Investment Associations and a member of the Board and Executive and Steering Committees of the International Accounting Standards Committee.

The International Auditing and Assurance Standards Board’s Audit Evidence Working Group has published a Project Update for International Standard on Auditing (ISA) 500, Audit Evidence. The Update includes details about its information gathering activities, issues identified to date, and the way forward for audit evidence. 

Based on its information gathering, the Audit Evidence Working Group developed an initial listing of possible issues and categorized the issues into three overarching topics:

• Changes in the source of information and how the information is processed, communicated, and used.
• Continual developments in technology.
• Professional skepticism.

The Audit Evidence Working Group is in the process of developing a project proposal for the IAASB’s consideration at its December 2020 meeting.

The IAASB’s Audit Evidence Working Group has published this Project Update for ISA 500, Audit Evidence, to update stakeholders about its information gathering activities, issues identified to date, and the way forward.

The International Standard on Auditing (ISA) 540 (Revised) Implementation Working Group today published illustrative examples for auditing expected credit loss (ECL) accounting estimates.

The examples illustrate how an auditor could address certain requirements of ISA 540 (Revised). They were developed to assist the auditor in understanding how ISA 540 (Revised) may be applied to:

• International Financial Reporting Standard (IFRS) 9 Impairment (ECL) – Credit Card
• IFRS 9 Impairment (ECL) – Significant Increase in Credit Risk
• IFRS 9 Impairment (ECL) – Macroeconomic Inputs and Data

The examples illustrate accounting estimates with varying characteristics and degrees of complexity. Each example illustrates a selection of requirements from ISA 540 (Revised). Not all requirements are addressed in each example, nor do they cover all parts of those requirements that have been selected. The requirements selected across each example vary to illustrate different aspects of ISA 540 (Revised) and to focus on those requirements that are most relevant to the example.

The three ECL examples are intended to be read together, as requirements that are addressed in one example may also be relevant to another example. For example, the Macroeconomic Inputs and Data example is focused primarily on the audit implications of such data, and does not repeat material in the other examples, which nevertheless may be relevant and applicable to that example more broadly.

These examples do not constitute an authoritative pronouncement of the International Auditing and Assurance Standards Board (IAASB), nor do they amend, extend or override the ISAs or other of the IAASB’s International Standards. It is not meant to be exhaustive and reading these examples is not a substitute for reading the ISAs.

Simple and complex illustrative examples, which demonstrate how an auditor may address selected requirements of ISA 540 (Revised) in the context of the audit of the financial statements of an entity with simple and complex accounting estimates, respectively, are also available.