The International Federation of Accountants (IFAC) today 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). It is expected that the responses to this paper will assist the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of IFAC, 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 South Africa, 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.

How to Comment
Comments on the consultation paper are requested by December 15, 2008. The paper may be downloaded from the IFAC website. Comments on the consultation paper may be sent to reviewengagements@ifac.org. They may also be faxed to James M. Sylph, IFAC Executive Director, Professional Standards, at +1-212-286-9570 or mailed to him at 545 Fifth Avenue, 14th Floor, New York, NY 10017, USA. All comments will be considered a matter of public record and will ultimately be posted on the IFAC website

About the IAASB
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 Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes its due process and working procedures.

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, 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, through its independent standard-setting boards, sets ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

Following the consideration and approval of due process by the Public Interest Oversight Board (PIOB), the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), today released International Standard on Auditing (ISAs) 550 (Revised and Redrafted), Related Parties and three clarity redrafted ISAs.

Related Parties
The involvement of related parties in major corporate scandals encouraged the IAASB to revise its current auditing standard on the subject. The revised Related Parties standard clarifies the meaning of "related party" for purposes of an audit. It also makes clear the auditor's responsibility to obtain sufficient evidence about the required accounting and disclosure of related party relationships and transactions and to understand how such relationships and transactions affect the view given by the financial statements.

"The standard will strengthen current auditing practice in this area by emphasizing the need for the auditor to understand related party relationships and transactions in order to identify the risks of material misstatement to which these may give rise, and directing the auditor to focus work effort on the assessed risks of material misstatement, including those due to fraud," explains John Kellas, IAASB Chairman.

"The revised standard clarifies the auditor's responsibilities in those cases where the financial reporting framework establishes minimal or no related party requirements. In addition, it provides enhanced guidance to assist the auditor in understanding and responding to the risks of material misstatement that may arise in relation to related parties with dominant influence," emphasizes Kellas.

Clarity Redrafted ISAs
In addition to ISA 550 (Revised and Redrafted), the IAASB has also released the following clarity redrafted ISAs:

• ISA 250 (Redrafted), Consideration of Laws and Regulations in an Audit of Financial Statements;
• ISA 510 (Redrafted), Initial Audit Engagements-Opening Balances; and
• ISA 570 (Redrafted), Going Concern.

They form part of the IAASB's ambitious 18-month program to redraft existing standards following the clarity drafting conventions.* To date, the IAASB has released 15 final clarity redrafted ISAs. The IAASB is on track to finalize its complete set of clarified ISAs by the end of this year.

The complete set of clarified ISAs, including newly revised standards such as ISA 550 (Revised and Redrafted), will be effective for audits of financial statements for periods beginning on or after December 15, 2009.

The ISAs can be downloaded free-of-charge from the IFAC online bookstore. 

About the 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 Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes its due process and working procedures.

IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, 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, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

* 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 International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), today released its Strategy and Work Program, 2009-2011. The three-year strategy includes an emphasis on the development of standards that contribute to the effective operation of the world's capital markets and that address the needs of small- and medium-sized entities and small and medium practices.

The Strategy and Work Program, issued following consideration and approval of its completeness from a public interest perspective by the Public Interest Oversight Board (PIOB)*, is consistent with the IAASB's overall objectives. ** It builds on the strong base of standards developed by the IAASB to date and focuses on three areas:

• The development of standards;
• The facilitation and monitoring of adoption of those standards; and
• Responding to concerns about the implementation of the standards by activities designed to improve the consistency with which they are applied in practice.

"The IAASB's vision is that the high quality standards on assurance, related services and, in particular, International Standards on Auditing that we develop in the public interest are adopted and applied internationally. The strategy and work program are consistent with this longer term vision," explains John Kellas, IAASB Chairman.

The Strategy and Work Program responds to significant developments in the environment in which audit and other assurance services are performed, and in which standards for such services are set. It also highlights the IAASB role in working toward global acceptance of and convergence with its standards and in establishing and maintaining relevant partnerships. It is underpinned by the IAASB's communications initiatives to keep stakeholders informed of its activities and to promote adoption and implementation of its standards.

The Strategy and Work Program reflects the outcome of an extensive consultation program to obtain the widest possible input into determining the IAASB's priorities over the next three years. A summary of the IAASB's conclusions with regard to significant matters raised during these consultations is presented in the Basis for Conclusions: IAASB Strategy and Work Program, 2009-2011.

"I am grateful to the many people and organizations that contributed to our strategy review consultations. I hope that the direction of our work will be seen as responding to the representations made to us, and to the public interest, which must be our overriding concern. Of course, events and circumstances may require us to amend our program, and for this reason it will be kept under constant review," notes Kellas.

The Strategy and Work Program, 2009-2011 can be downloaded free-of-charge from the IFAC online bookstore. To access the related Basis for Conclusions and other information on the IAASB's work, visit its home page.

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, 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, through its independent standard-setting boards, sets ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

Notes to Editors

* The PIOB was formally established in February 2005 to oversee IFAC's auditing and assurance, ethics, and education standard-setting activities as well as the IFAC Member Body Compliance Program. The objective of the PIOB is to increase confidence of investors and others that such activities, including the setting of standards by the IAASB, are properly responsive to the public interest. PIOB members are nominated by international institutions and regulatory bodies.

** The objective of the IAASB is: "To serve the public interest by setting, independently and under its own authority, high quality standards dealing with auditing, review, other assurance, quality control, and related services, and by facilitating the convergence of national and international standards." This objective contributes to enhanced quality and uniformity of practice in these areas throughout the world and to strengthened public confidence in financial reporting. The IAASB aims to achieve its objective through the following strategic initiatives:

(a) Development of Standards - Establish high quality auditing, review, other assurance, quality control, and related services standards.

(b) Global Acceptance, Convergence and Partnership - Promote the acceptance and adoption of IAASB pronouncements throughout the world and support a strong and cohesive international accountancy profession by coordinating with IFAC member bodies, regional organizations, and national standard setters to achieve the objective of the IAASB.

(c) Communication - Improve the quality and uniformity of auditing practices and related services throughout the world by encouraging debate and presenting papers on a variety of audit and assurance issues and increasing the public image and awareness of the activities of the IAASB.

The Board of the International Federation of Accountants (IFAC) has appointed Prof. Dr. Arnold Schilder, RA, to lead the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of IFAC, beginning January 1, 2009. Prof. Schilder's appointment to a three-year term as IAASB Chair was approved by the Public Interest Oversight Board (PIOB)*, which oversees the IAASB's activities, at its meeting in Madrid, Spain last week.

"Arnold Schilder brings both a breadth and depth of experience and strong integrity to the position of IAASB Chair," states Fermín del Valle, IFAC President. "As its next chair, he will lead the IAASB in continuing to develop high quality international audit standards to be used around the world."

Prof. Schilder is currently Executive Director of De Nederlandsche Bank NV, the prudential supervisor of financial institutions in the Netherlands. He is a member of the Basel Committee on Banking Supervision and served as Chairman of its Accounting Task Force from 1999 to 2006. Prof. Schilder has also served as a member of the PIOB and as Chairman of the European Interim Working Committee on Financial Conglomerates. In addition, he is a part-time professor of auditing at the University of Amsterdam and is a past President of the Koninklijk Nederlands Instituut van Registeraccountants, IFAC's member body in the Netherlands. Previously, he was a senior international audit partner in PricewaterhouseCoopers (PwC) in the Netherlands and worked for PwC and predecessor firms from 1972 to 1998.

As chair, Prof. Schilder will lead the IAASB in its initiatives in setting high quality auditing and assurance standards and facilitating the convergence of international and national standards. He will play a key role in guiding the IAASB as it strives to enhance the quality and uniformity of audit practice throughout the world and to build public confidence in financial reporting.

"I am delighted to chair the IAASB during the next three years as it continues to fulfill its public interest mission," states Prof. Schilder. "I will welcome the input of all our stakeholders, including users of IAASB standards, national standard setters, regulators, governments, and the public, as the IAASB addresses new assurance topics as well as promotes further the benefits of its standards to key constituencies that have not yet adopted them."

For more information about the work of the IAASB, visit its home page at https://www.iaasb.org.

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, 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, through its independent standard-setting boards, sets ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

* Note to Editors
The Public Interest Oversight Board (PIOB) was formally established in February 2005 to oversee IFAC's auditing and assurance, ethics, and education standard-setting activities as well as the IFAC Member Body Compliance Program. The objective of the PIOB is to increase confidence of investors and others that such activities, including the setting of standards by the IAASB, are properly responsive to the public interest. PIOB members are nominated by international institutions and regulatory bodies.

French and Spanish translations of the press release are posted below.

The International Federation of Accountants (IFAC), the global organization for the accountancy profession, is seeking nominations for two public member positions on the International Auditing and Assurance Standards Board (IAASB) beginning in January 2009. Individuals, organizations, accountancy firms, and IFAC member bodies and associates may submit nominations for the public member positions by June 22, 2008.

Nominees for the public member positions must have an appropriate level of knowledge about the work of the IAASB, although they need not have a professional accountancy designation. Public members are expected to act in the public interest and must be seen to be independent of any special interests and seen to be acting to represent society as a whole.

The IAASB serves the public interest by setting, independently and under its own authority, high quality international auditing and assurance standards and facilitating convergence to those standards, thereby enhancing the quality and uniformity of practice worldwide and strengthening public confidence in financial reporting. More than 100 countries use or are in the process of adopting or incorporating the IAASB's International Standards on Auditing into their national auditing standards, or are using them as a basis for preparing national auditing standards.

Public members of the IAASB will participate in the development of assurance standards on green house gas emissions and reports on controls at third party service organizations, as well as the development of other new and amended international standards following the IAASB's rigorous due process. Some IAASB members will also be engaged in liaison activities with key regulatory and other organizations, including meetings, presentations and participation in forums and workshops.

For more information about general qualifications for nominees, their responsibilities, and the process for submitting nominations, see the Call for Nominations on IFAC's website.
 
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, 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, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

The International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), seeks to fill a key technical manager position.

The IAASB is made up of volunteer members from around the world. The technical manager's key responsibilities will include conducting project research; interacting with national standard setters and IFAC members and associates from various countries; and developing, editing and overseeing publication of IAASB exposure drafts, standards and guidance. Other responsibilities include:

• Drafting project proposals and presenting them to the IAASB and, as appropriate, to task forces;
• Attending IAASB meetings as well as task force meetings, participating in discussions and recording discussions and decisions;
• Preparing IAASB meeting agendas and papers and developing articles and speeches; and
• Assisting the Chairman and Executive Director, Professional Standards in responding to technical and process issues raised by the IAASB Consultative Advisory Group and the Public Interest Oversight Board.*

The ideal candidate for this position will have a professionally recognized accounting degree or other relevant qualification. An excellent knowledge of issues relating to auditing, and experience in the standard-setting process is a plus, as is an understanding of the special considerations relating to the audit of multinational entities, small and medium enterprises or public sector entities.

It is anticipated that the successful applicant will work at IFAC's headquarters in New York City. (About 25 day to 35 days per year of international travel are required.)

A complete job description, including additional information concerning preferred background and experience, is available on the IFAC website. Interested candidates should submit their résumé (CV) by June 20, 2008 to the IFAC Human Resources Manager.

About the IAASB and IFAC
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.

IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, 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, through its independent standard-setting boards, sets ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

* Note to Editors
The Public Interest Oversight Board (PIOB) was formally established in February 2005 to oversee IFAC's auditing and assurance, ethics, and education standard-setting activities as well as the IFAC Member Body Compliance Program. The objective of the PIOB is to increase confidence of investors and others that such activities, including the setting of standards by the IAASB, are properly responsive to the public interest. PIOB members are nominated by international institutions and regulatory bodies.

Following the consideration and approval of due process by the Public Interest Oversight Board (PIOB), the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), today released International Standard on Auditing (ISA) 580 (Revised and Redrafted), Written Representations, and ISA 560 (Redrafted), Subsequent Events.

Written Representations
ISA 580 (Revised and Redrafted) contains new requirements designed to improve the auditors' practice in relation to the written statements that management provides to auditors to confirm certain matters or to support other audit evidence (referred to as "written representations"). During the development of the standard, the IAASB considered matters such as the reasons for requesting written representations, the value of the evidence that they provide, and from whom they should be requested.

The standard requires the auditor to request management to provide written representations on two fundamental matters:

• That it has fulfilled its responsibility for the preparation and presentation of the financial statements; and
• That it has provided the auditor with all relevant information and that all transactions have been recorded and are reflected in the financial statements.

The auditor may deem it appropriate to request other written representations during the course of the audit. Other ISAs also include requirements for the auditor to request certain written representations in respect of specific matters. In addition, ISA 580 (Revised and Redrafted) includes requirements for appropriate action by the auditor when written representations are not provided by management or are considered to be unreliable.

The ISA makes clear that, although written representations provide necessary audit evidence, they do not provide sufficient appropriate audit evidence on their own about any matters. Furthermore, the fact that management has provided written representations does not affect the nature or extent of other audit evidence that the auditor obtains about the fulfillment of management's responsibilities, or about specific assertions.

"The aim of the new requirements is to enhance the quality and appropriateness of written representations sought by the auditor by a focus on what is really necessary and, in particular, to deal with concerns that auditors may over-rely on representations at the expense of other evidence," explains John Kellas, IAASB Chairman.

Subsequent Events
ISA 560 (Redrafted) forms part of the IAASB's ambitious 18-month program to redraft existing standards following the clarity drafting conventions.[1] The standard, which deals with the auditor's responsibilities relating to subsequent events in an audit of financial statements, provides more clarity as to the requirements, but does not incorporate any substantive changes thereto. ISA 560 (Redrafted) will contribute to improving the consistency of its application by auditors around the world.

The complete set of clarified ISAs, including newly revised standards such as ISA 580 (Revised and Redrafted), is effective for audits of financial statements for periods beginning on or after December 15, 2009.

The ISAs can be downloaded free-of-charge from the IFAC online bookstore.

About the 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 Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes its due process and working procedures. 

IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, 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, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

[1]       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 International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), has released its 2007 annual report which highlights its work in enhancing the clarity of international standards and notes progress in achieving global convergence to international auditing standards. The report also details the IAASB's consultation and outreach program and offers a preview of its proposed future strategy.

A central part of the IAASB's work program over the past year has been the redrafting of its international standards to make them clearer and to promote their adoption and translation. During 2007, the IAASB approved seven final International Standards on Auditing (ISAs) and 21 exposure drafts as part of its Clarity project. It also announced that the effective date for all final redrafted ISAs will be for periods beginning on or after December 15, 2009. The IAASB plans to complete the redrafting of all ISAs by the end of 2008.

To further promote international convergence of standards, the IAASB engaged in extensive consultation and coordination activities in 2007 with international regulators and organizations, national auditing standard setters, and other stakeholders. The IAASB also continued to receive oversight from the Public Interest Oversight Board and obtained input to its work program and technical projects from the IAASB Consultative Advisory Group (CAG). A report from David Damant, Chairman of the IAASB CAG, is included in the annual report.

Throughout 2007, the IAASB actively consulted with stakeholders and users of its standards regarding the development of its proposed future technical strategy and work program. The annual report presents highlights of the proposed future strategy, which the IAASB is reviewing at its meeting in New York City this week.

The 2007 IAASB annual report can be downloaded from its website.

About the 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 Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes its due process and working procedures.

IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, 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, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

The International Federation of Accountants (IFAC) has released its 2008 Handbook of International Auditing, Assurance, and Ethics Pronouncements. The handbook can be downloaded in PDF format from the IFAC online bookstore (https://www.ifac.org/store), and print copies can be ordered now for shipment in mid-March. In addition, the 2008 Handbook of International Public Sector Accounting Pronouncements is currently being finalized and will be available for download from the IFAC bookstore later in March.

Auditing and Assurance Handbook
The 2008 auditing and assurance handbook is presented in two parts. The first part contains pronouncements on auditing, review, other assurance, and related services issued by the International Auditing and Assurance Standards Board (IAASB) as of January 1, 2008. It also includes the IFAC Code of Ethics for Professional Accountants, issued by the International Ethics Standards Board for Accountants, along with new definitions for "firm," "network," and "network firm." The second part of the handbook features nine International Standards on Auditing redrafted by the IAASB to improve their clarity, as well as background information on the IAASB's Clarity project.

Print copies of the handbook can be ordered for US$150.00 plus shipping. Discounts are available for students, academics, and individuals living in developing countries, as well as for orders of 10 or more copies.

Public Sector Accounting Handbook
The 2008 Handbook of International Public Sector Accounting Pronouncements will contain all pronouncements of the International Public Sector Accounting Standards Board (IPSASB) as of December 31, 2007. It will also feature two new standards - International Public Sector Accounting Standard (IPSAS) 25, Employee Benefits, and IPSAS 26, Impairment of Cash-Generating Assets - as well as an updated Cash-Basis IPSAS, Financial Reporting under the Cash Basis of Accounting. Print copies of the public sector handbook can be ordered for no charge, except for a US$25.00 shipping cost, for shipment in late-March.

How to Order
The 2008 Handbook of International Auditing, Assurance, and Ethics Pronouncements can be downloaded or ordered from the IFAC online bookstore. Orders can also be placed by calling IFAC.

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. Through its independent standard-setting boards, IFAC sets international standards on ethics, auditing and assurance, education, and public sector accounting. It also issues guidance to encourage high quality performance by professional accountants in business.

New requirements designed to enhance the rigor applied to auditing accounting estimates, including fair value accounting estimates, were released today by the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC). International Standard on Auditing (ISA) 540 (Revised and Redrafted), Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures, requires the auditor to focus attention on areas of higher risk, accounting judgment, and possible bias, thereby assisting the auditor to form appropriate conclusions about the reasonableness of estimates in the context of an entity's financial reporting framework.

ISA 540 (Revised and Redrafted) adopts a risk-based approach to the audit of accounting estimates including fair value accounting estimates. It addresses matters such as the auditor's evaluation of the effect of estimation uncertainty on risk assessments, management's methods for making estimates, the reasonableness of assumptions used by management, and the adequacy of disclosures. The ISA provides expanded guidance on auditing fair value accounting estimates, including audit considerations relating to the proper application of the requirements of the financial reporting framework relevant to such estimates and the use of models in valuations.

"We are clearly in an environment where the measurement and disclosure of fair values are of great importance, with recent market experience highlighting the difficulties that arise in valuing financial instruments. It is, therefore, timely that the IAASB has issued its revised standard to provide enhanced guidance on auditing accounting estimates, particularly fair value ones determined on the basis of a complex valuation model or significant unobservable inputs," states John Kellas, Chairman of the IAASB, adding, "We are confident that the standard will enhance current practice and promote consistency worldwide."

ISA 540 (Revised and Redrafted) combines ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures (Other Than Those Involving Fair Value Measurements and Disclosures), and ISA 545, Auditing Fair Value Measurements and Disclosures. The IAASB concluded that the similarities between estimates and fair value estimates could be emphasized, and redundancy eliminated, by combining these two standards. The new standard forms part of the IAASB's ambitious 18-month program to redraft existing standards and to develop new and revised standards following the clarity drafting conventions.¹

Mr. Kellas explains: "Although ISA 540 (Revised and Redrafted) is effective for audits of financial periods commencing on or after December 15, 2009, the date when all the standards redrafted under the IAASB's Clarity project become effective, it deals with a subject of considerable current concern. In this climate, auditors will be well aware of the need to understand the accounting principles and rules relating to accounting on the basis of fair value, and to give appropriate consideration to their application. Auditors may therefore wish to consider the material in the new standard as they complete their 2007 audits, and plan and perform those for 2008 and 2009 engagements. Other existing standards may also be particularly relevant, for example, those on the use of experts by the auditor and on the auditor's consideration of the going concern basis of accounting."

The IAASB also recommends that auditors be alert for relevant guidance that has been, or may be, issued by other organizations: for example, the paper, Determining Fair Value of Financial Instruments under International Financial Reporting Standards (IFRS) in Current Market Conditions, issued in December 2007 by the world's six largest accounting firms (under the auspices of the Global Public Policy Committee); the US Public Company Accounting Oversight Board's Staff Audit Practice Alert No. 2, Matters Related to Auditing Fair Value Measurements of Financial Instruments and the Use of Specialists, also released in December; and the UK Auditing Practices Board's (APB) Bulletin 2008/01, Audit Issues when Financial Market Conditions are Difficult and Credit Facilities may be Restricted.

ISA 540 (Revised and Redrafted) can be downloaded free-of-charge from the IFAC online bookstore.

Task Force on Fair Value Auditing Guidance
To address some of the valuation difficulties highlighted by the problems in the world's major financial markets, the IAASB plans to explore whether and how to supplement ISA 540 (Revised and Redrafted) as soon as practicable with implementation guidance on auditing fair value estimates. Any such guidance would have the aim of raising awareness of issues and best practice on a timely basis and further promoting audit consistency. Accordingly, the IAASB agreed in December 2007 to establish a Task Force to consider how best to approach the development of possible further fair value auditing guidance.

The demand for implementation guidance from a number of constituencies, including regulators, was recognized in the IAASB Consultation Paper, Proposed Strategy for 2009-2011. That paper raised the possibility that the IAASB might develop guidance for auditors on the audit of complex valuation models. However, recent developments in the financial markets, in particular the current lack of market liquidity, have persuaded the IAASB to create the Task Force now to take this idea further even though the responses to the Consultation Paper have yet to be fully analyzed.

The Task Force, chaired by a member of the IAASB and to comprise interested parties with relevant perspectives and expertise, will consider aspects of the audit of financial statement items measured at fair value and make recommendations to the IAASB for matters that require priority attention.

About the 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 Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes its due process and working procedures.

IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, 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, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

¹Key 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.