international auditing and assurance standards board
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International Auditing and Assurance Standards Board. Convergence with International Standards on Auditing John Kellas, IAASB Chairman. CReCER Regional Conference June 14, 2007. Agenda. Why convergence matters The challenges of convergence Meeting the challenges of convergence Conclusion. - PowerPoint PPT PresentationTRANSCRIPT
International Auditing and Assurance Standards BoardInternational Auditing and Assurance Standards Board
Convergence with International Standards Convergence with International Standards on Auditingon Auditing
John Kellas, IAASB ChairmanJohn Kellas, IAASB Chairman
CReCER Regional ConferenceCReCER Regional ConferenceJune 14, 2007June 14, 2007
AgendaAgenda• Why convergence mattersWhy convergence matters• The challenges of convergenceThe challenges of convergence• Meeting the challenges of convergenceMeeting the challenges of convergence• ConclusionConclusion
AcceptanceAcceptance• Wide acceptance of international standardsWide acceptance of international standards
– ““Wong” ReportWong” Report– 12 Key Standards for Sound Financial Systems12 Key Standards for Sound Financial Systems
BenefitsBenefits• International investorsInternational investors
– Applicable to listed and unlisted entitiesApplicable to listed and unlisted entities
• International regulatorsInternational regulators• Auditing firmsAuditing firms• Educators and learnersEducators and learners
Convergence vs. AdoptionConvergence vs. Adoption• Meaning of “convergence”Meaning of “convergence”• Adoption is preferred approachAdoption is preferred approach
– All the advantages of convergenceAll the advantages of convergence– All countries may contribute to standard-setting All countries may contribute to standard-setting
processprocess– Fastest way to eliminate / minimize differencesFastest way to eliminate / minimize differences
ChallengesChallenges• Starting pointStarting point
– Established national standard setting process Established national standard setting process vs. new economiesvs. new economies
• Authority of standard settersAuthority of standard setters– Standard setting no longer a function of most Standard setting no longer a function of most
IFAC member bodiesIFAC member bodies
• Cultural differencesCultural differences
Challenges (Cont.)Challenges (Cont.)• Philosophical differencesPhilosophical differences
– Rules vs. principles / objectivesRules vs. principles / objectives
• The scope of the standardsThe scope of the standards– Application of standards to all types and sizes Application of standards to all types and sizes
of entity by all sizes of audit firmof entity by all sizes of audit firm
• TranslationTranslation• Frequency and complexity of changesFrequency and complexity of changes
Meeting the ChallengesMeeting the Challenges• Working in partnership with national standard Working in partnership with national standard
setterssetters• National standard setters to address matters of National standard setters to address matters of
domestic concerndomestic concern– Guidance on modifications to ISAs issued in July 2006Guidance on modifications to ISAs issued in July 2006
• Composition of the IAASBComposition of the IAASB• Dialogue with ‘stakeholders’Dialogue with ‘stakeholders’
– IAASB Consultative Advisory Group and othersIAASB Consultative Advisory Group and others
• Development of high-quality standardsDevelopment of high-quality standards
High-Quality StandardsHigh-Quality Standards• High-quality standards are:High-quality standards are:
– ClearClear– Not capable of different interpretationsNot capable of different interpretations– Capable of translationCapable of translation– EnforceableEnforceable– Designed to achieve a high-quality auditDesigned to achieve a high-quality audit– ‘‘Jurisdictionally neutral’Jurisdictionally neutral’– Strike a balance between principles and rulesStrike a balance between principles and rules– Subject to due processSubject to due process– Subject to public oversightSubject to public oversight
Conclusion Conclusion • Adoption of international standards should Adoption of international standards should
be supported bybe supported by– International Quality Control StandardsInternational Quality Control Standards– IFAC Code of Ethics for Professional IFAC Code of Ethics for Professional
AccountantsAccountants– Implementation guidance and adviceImplementation guidance and advice– Training and educationTraining and education– Monitoring and enforcementMonitoring and enforcement
Conclusion (Cont’d)Conclusion (Cont’d)• 100+ countries use, base their standards on, 100+ countries use, base their standards on,
ISAsISAs• Significant announcements bySignificant announcements by
– Canada, China, India and the USACanada, China, India and the USA
• Project to adopt ISAs in the European UnionProject to adopt ISAs in the European Union• Contribution of IFAC Member Bodies in Contribution of IFAC Member Bodies in
Latin America is recognizedLatin America is recognized
International Federation of AccountantsInternational Federation of Accountantswww.ifac.orgwww.ifac.org