The International Auditing and Assurance Standards Board (IAASB) today released an updated version of the First-time Implementation Guide for International Standard on Quality Management (ISQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, which was previously issued on June 14, 2021.

The update was made in response to questions the IAASB received on the illustrative table on page 89 of the original guide illustrating some scenarios relating to the evaluation of the firm’s system of quality management and related possible conclusions in accordance with paragraph 54 of ISQM 1. The table was intended to illustrate how the combination of various factors outlined in the table may affect what conclusion is reached. It was not intended to be definitive on the conclusions reached in each circumstance.

Given a number of questions from various sources about how to interpret the table, the following revisions were made to provide further context and clarification when evaluating the system of quality management:

• The section “How the Evaluation is Undertaken, Including What Information is Considered” (pages 89–92) was revised.
• Limited conforming changes were made to the section “Evaluate the Remedial Actions, and if Necessary, Take Further Action” (page 79).

The suite of quality management standards come into effect on December 15, 2022. This guide, and the first-time implementation guide for ISQM 2, do not amend or override the International Standards on Quality Management, the texts of which alone are authoritative. Reading the publications are not a substitute for reading the ISQMs. The IAASB encourages all practitioners to plan early for appropriate implementation, given the potential impact of the changes to firms’ systems of quality management.

IFAC is dedicating our second annual virtual summit to sustainability and helping professional accountants do different things with the skills and competencies they already have in their toolbox.

Our three-day summit in October will focus on the demand for organizations to act and the needs and perspectives of investors, regulators and public interest entities. It features speakers with global expertise in sustainability, environmental, social, and governance (ESG), integrated and sustainability reporting, sustainability-related investor needs, and more. It will help professional accountants, and the professional accountancy organizations that support them, understand—and take action to meet—growing demands for sustainability services from the public and private sector.

  Register Here

 New Platform

Taking advantage of the virtual world, this year’s summit will take a place in a new platform built for virtual conferences by the American Accounting Association. The platform features an exhibit hall available 24 hours a day, conference chat function, speaker backgrounds and Zoom integration. Keynotes and sessions will also include live interpretation in French, Russian, and Spanish. Video recordings for sessions will also be available on the IFAC website following the event.

Agenda

• Tuesday, October 12: The demand for organizations to act
  • 8:00 am EST-10:15 am EST
  • Keynote speakers: Helle Bank Jorgensen and Mirtha Kastrapeli
  • Case study: Forico
• Wednesday, October 13: Investors’ Perspective on Accountants’ Role
  • 8:00 am EST-10:45 am EST
  • Panel: public and private sector employers’ needs & perspectives, featuring Fastly and Robinhood board member, Future Generations Commissioner (Wales), Korn Ferry (global recruiter), and The Luxury Network (Singapore)
  • Case studies with KPMG and Black Sun
• Thursday, October 14: Public Interest Entities’ Perspective on Accountants’ Role
  • 8:00 am EST-11:00 am EST
  • Panel: the needs of public interest entities, featuring speakers representing regulators, audit oversight, reporting, and the development community
  • Panel: Ensuring A Long-Term Sustainable Profession Through the Lens of Early Career Accountants

Additional details will be published in IFAC Events as speakers are confirmed.

Join the IAASB for a three-part discussion series on LinkedIn on the proposed new standard for audits of less complex entities. In the first session IAASB Chair Tom Seidenstein, IAASB Member and Less Complex Entities (LCE) Task Force Chair Kai Morten Hagen, and IAASB Deputy Director Beverley Bahlmann will address the journey to the proposed new standard, its key principles, how it compares to the existing suite of International Standards on Auditing (ISAs) and why it is important for stakeholders. The first discussion will livestream on LinkedIn on September 28 at 8 am ET.

The second livestream discussion will follow on October 20 at 8 am with IAASB Technical Director Willie Botha, IAASB Member Chun-Wee Chiew and IAASB Consultative Advisory Group Member Claes Norberg addressing on which entities the proposed standard can be used, who makes decisions regarding using the standard, and how those decisions are made. IAASB Technical Advisor and LCE Task Force Member Viviene Bauer will moderate the discussion.

The third and final livestream in this series will air on November 17 at 8 am. It will feature IAASB Member Julie Corden, LCE Reference Group Member Andrew Braithwaite, and IAASB LCE Task Force Member Brendan Murtagh discussing what the proposed new standard means for audit firms and practitioners, including the benefits of the standard, what firms and engagement teams need to consider in decision making, and the potential impact on small- and medium-sized practices.

The IAASB strongly encourages all interested stakeholders to provide their feedback on the proposed new standalone standard for audits of less complex entities by January 31, 2022. The standard is relevant to users of financial statements, owners, management and those charged with governance of entities, preparers of financial statements, legislative or regulatory authorities, relevant local bodies with standard-setting authority, professional accountancy organizations, academics, regulators and audit oversight bodies, and auditors and audit firms, among others.

IFAC defined two key actions for G20 leaders to focus on as COVID-19 persists: supporting the IFRS Foundation’s initiative on sustainability standards, and championing public financial management. Commitment to these two actions, which build on the four priorities laid out in IFAC’s 2020 G20 Call to Action, is central to building a better future.

“For society to transition out of the COVID-19 pandemic in a more sustainable, inclusive, and prosperous position than we entered it, we need a concerted effort from global policymakers and the accountancy profession,” said CEO Kevin Dancey. “To seize these opportunities, we must act now.”

To strengthen global economies, societies, and the environment, as well as tackle challenges resulting from the COVID-19 pandemic, IFAC calls on G20 leaders to:

1. Support the IFRS Foundation Initiative on Sustainability Standards:

Achieving a more sustainable and inclusive economy with the necessary speed requires mobilizing the private sector and governments to work together. The G20 Finance Ministers and Central Bank Governors have identified the critical role of high-quality and comparable data and disclosures in mobilizing sustainable finance. The B20 Finance & Infrastructure Task Force recognizes the same. Momentum is growing around developing a global baseline of sustainability standards, with the IFRS Foundation poised to deliver. IFAC strongly supports this crucial work.

2. Champion Public Financial Management:

At the heart of public sector transparency and integrity—and prosperity for all individuals—is public financial management (PFM). A robust PFM system means that resources are appropriately allocated against public policy objectives that are in the public interest. Governments must endeavor to achieve the most with the resources they have, while minimizing loss through waste, fraud, or corruption—high quality PFM makes this happen. IFAC calls on the G20 to set an example for all jurisdictions worldwide in championing a continued focus on high-quality PFM.

Read IFAC’s full 2021 G20 Call to Action here and learn more about the accountancy profession’s role in enhancing corporate reporting during IFAC’s 2021 EdExchange: Leading Sustainability virtual summit October 12-14.

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 180 members and associates in 135 countries and jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.

The IAASB has released the 2020 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements. The latest edition of the handbook includes:

• ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures replacing ISA 540, Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures. The handbook also includes conforming and consequential amendments from ISA 540 to other standards, with the exception of International Auditing Practice Note 1000, which will be updated for changes to ISA 540 (Revised), and ISA 315 (Revised 2019) in the 2021 IAASB Handbook. ISA 540 (Revised) is effective for audits of financial statements for periods beginning on or after December 15, 2019.
• Changes for the conforming amendments arising from the restructured International Code of Ethics for Professional Accountants, issued by the International Ethics Standards Board for Accountants, have been made in Volume 1 and 2 of the 2020 IAASB Handbook.
• The following standards, which are not yet effective, have been included in the back of Volume 1 and 2:
• ISA 315 (Revised 2019), Identifying and Assessing the Risks of Material Misstatement
• Conforming and Consequential Amendments to Other ISAs Arising from ISA 315 (Revised 2019)
• International Standard on Quality Management (ISQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements
• ISQM 2, Engagement Quality Reviews
• ISA 220 (Revised), Quality Management for an Audit of Financial Statements
• Conforming and Consequential Amendments to Other ISAs Arising from the Quality Management Projects
• ISRS 4400 (Revised), Agreed-Upon Procedures Engagements

The handbooks can be downloaded from the IAASB website.

Coming Soon: New Online Platform for Digital Access

The first fully digital IAASB handbook will be available on a new web application, e-International Standards (eIS) soon. The platform is optimized for users through search functions, resources and references, and easy navigation. Follow the IAASB on Twitter and LinkedIn or register and subscribe via the IAASB website for launch details and announcements.

Reproducing and Translating the IAASB Handbook

To help adoption and implementation of the IAASB standards, stakeholders are invited to submit requests for permission to reproduce or translate the IAASB handbook online via the Online Permissions Requests or Inquiries system on the IFAC website.

Today, the International Federation of Accountants (IFAC) published a framework for implementing global sustainability standards at the local level, focusing on the building blocks approach published in May 2021. IFAC believes that jurisdictions must begin examining how global standards that the International Sustainability Standards Board (ISSB) intends to develop, starting with climate, can fit together with sustainability-related reporting requirements set at the jurisdictional level.

“As work to establish the ISSB advances, PAOs, firms, and professional accountants in business should be engaging now with their policymakers to consider what mechanisms may need to be established to make forthcoming reporting requirements effective in their jurisdiction,” said IFAC CEO Kevin Dancey. “IFAC’s framework sets out various pathways for local implementation of the IFRS initiative that can all lead to the global and harmonized corporate reporting system we need for investors, capital markets, and stakeholders at large.”

IOSCO’s Sustainability-related Issuer Disclosures report proposes a timeline for the ongoing work of the IFRS Foundation–with the ISSB climate standard expected to be completed by June 2022. Jurisdictions that begin engaging with policymakers now will be able to capitalize on the forthcoming standards–and therefore serve the public interest–as soon as they are finalized.

IFAC urges its member organizations to continue their support for the IFRS initiative, to engage now with local policymakers, and to provide feedback on the framework for making global sustainability standards local.

Read more about IFAC’s support for global sustainability-related standards here.

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 180 members and associates in 135 countries and jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.

The IAASB has published new documents related to its open consultation on the audits of less complex entities:

• Proposed supplemental guidance on auditor reporting to provide further guidance on modifications and other changes to the auditor’s report when using the proposed standard; and
• “Mapping” documents to help users navigate between existing, equivalent International Standards on Auditing and the requirements in the newly proposed International Standard on Auditing for Less Complex Entities (ISA for LCE).

The IAASB strongly encourages all interested stakeholders to provide their feedback on the proposed standard by January 31, 2022. The standard is relevant to users of financial statements, owners, management and those charged with governance of entities, preparers of financial statements, legislative or regulatory authorities, relevant local bodies with standard-setting authority, professional accountancy organizations, academics, regulators and audit oversight bodies, and auditors and audit firms, among others.

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

In preparation of its 3rd Research Forum, which will be co-hosted by Comparative International Governmental Accounting Research Network (CIGAR) at its June 2022 conference, the IPSASB is calling for scholarly contributions from the academic community.

Coordinated through the Academic Advisory Group, which includes independent scholars from all parts of the world, as well as the IPSASB members who have an academic background, IPSASB is offering a grant of USD $1,500 for selected scholarly papers submitted covering three research areas with up to six grants available in total.

The research areas of interest are:

Research Area 1: Research on Practical IPSAS Implementation Challenges 

• Differential Reporting 
• Discount Rates

Research Area 2: Research on Adoption and Implementation of Specific IPSAS

• IPSAS 31, Intangible Assets
• IPSAS 33, First-Time Adoption of Accrual Basis IPSAS

Research Area 3: Broad Future Focused Research

• Climate Change and Public Sector Financial Reporting Related to Sustainability 
• Financial Reporting Impacts of Digitization in the Public Sector

The grant recipients, as well as other scholars, will present the first drafts of their full papers at the 2022 Research Forum (date TBD). For more information, see the the IPSASB’s Call for Papers.

Learn more about the Academic Advisory Group.

About the IPSASB

The International Public Sector Accounting Standards Board® (IPSASB®) works to improve public sector financial reporting worldwide through the development of IPSAS®, international accrual-based accounting standards, for use by governments and other public sector entities around the world.

To continue to drive engagement and solicit feedback on its public consultation on a proposed new standard for audits of financial statements of less complex entities (LCE), the IAASB has published a targeted outreach plan. This plan details the IAASB’s focused efforts to facilitate feedback from different stakeholder groups through roundtables, presentations and other related activities. The plan is expected to evolve and will continue to be updated as events and activities are added or confirmed.

The landmark proposed new standard for audits of financial statements of less complex entities responds to demands to have a set of high-quality audit requirements tailored for the needs of less complex entities. The proposed new standard aims to provide a globally consistent approach at a time where several jurisdictional-specific less complex entities standards or related initiatives are arising.

The IAASB strongly encourages all interested stakeholders to provide their feedback on the proposed standard by January 31, 2022. The standard is relevant to users of financial statements, owners, management and those charged with governance of entities, preparers of financial statements, legislative or regulatory authorities, relevant local bodies with standard-setting authority, professional accountancy organizations, academics, regulators and audit oversight bodies, and auditors and audit firms, among others.

Stakeholders can submit responses through the “Submit Comment” button online. The Exposure Draft will also be available in French and Spanish in early September 2021.

About the IAASB
The International Auditing and Assurance Standards Board 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 significant impact of climate-related matters on organizations’ business models, cash flows, financial performance, and resiliency requires immediate attention not only due to increasing pressure from investors, regulators, and policy makers, but the urgency of the climate crisis itself,” said Kevin Dancey, IFAC CEO. “Climate scenario analysis and risk assessment can be complex, and accountants can help translate those risks and opportunities into numbers able to initiate much-needed action.”

Helen Brand, chief executive of ACCA added: “Collaboration is key to tackling the existential threats and risks that face economies and societies due to climate change. Professional accountants are therefore an essential part of this necessary joined-up thinking to drive good decision-making, and make the necessary links with the investment community and other stakeholders. Accountants’ skills and knowledge around around integrated reporting, encompassing capitals be they natural, financial, manufactured, human, social/relationship or intellectual, have a vital role in this global effort.”

Register now to join online September 20. A recording of the event will be available after the event. 

About Climate Week NYC  

Hosted annually by international non-profit the Climate Group in conjunction with the United Nations, and in partnership with the COP26 and the City of New York, Climate Week NYC is a global opportunity to come together to accelerate climate action and assess progress ahead of COP26. 

About ACCA 

We’re a thriving global community of 233,000 members and 536,000 future members based in 178 countries and regions, who work across a wide range of sectors and industries. We uphold the highest professional and ethical values.

We offer everyone everywhere the opportunity to experience a rewarding career in accountancy, finance and management. Our qualifications and learning opportunities develop strategic business leaders, forward-thinking professionals with the financial, business and digital expertise essential for the creation of sustainable organisations and flourishing societies.

Since 1904, being a force for public good has been embedded in our purpose. In December 2020, we made commitments to the UN Sustainable Development Goals which we are measuring and will report on in our annual integrated report.

We believe that accountancy is a cornerstone profession of society and is vital helping economies, organisations and individuals to grow and prosper. It does this by creating robust trusted financial and business management, combating corruption, ensuring organisations are managed ethically, driving sustainability, and providing rewarding career opportunities.

And through our cutting-edge research, we lead the profession by answering today’s questions and preparing for the future. We’re a not-for-profit organisation. Find out more at accaglobal.com

About IFAC 

IFAC (the International Federation of Accountants) 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.  

Comprised of over 175 members and associates in more than 130 countries and jurisdictions, IFAC represents more than 3 million accountants in public practice, education, government service, industry, and commerce. Over four decades, IFAC has represented the global profession and supported the development, adoption, and implementation of international standards that underpin the contributions of today’s global accountancy profession.  

IFAC has maintained a long-term approach to building and strengthening a global accountancy profession that supports transparent, accountable, and sustainable organizations, financial markets, and economies. More information is here www.ifac.org