International Federation of Accountants IFAC SMP Committee Guides Bernard Scicluna Member – IFAC SMP Committee President – Malta Institute of Accountants IFAC SMP FORUM 2009 Beijing, China 28 October 2009

International Federation of Accountants IFAC SMP Committee Guides ISA Guide QC Guide PM Guide Other

International Federation of Accountants IFAC SMP Committee Guides ISA Guide QC Guide PM Guide Other

Largely SMP Committee reaction to the issue of the audit risk standards, around 2004Largely SMP Committee reaction to the issue of the audit risk standards, around 2004 Secure the provision of guidance on the application of current ISAs in the audit of small entitiesSecure the provision of guidance on the application of current ISAs in the audit of small entities For example, new standards required documentation of 5 components of internal controlFor example, new standards required documentation of 5 components of internal control –Control environment, risk assessment procedure, information system, control activities, monitoring of controls ISA Guide

IFAC Board Approval (Beijing 2006) effectively established operating framework for SMPC Guides:IFAC Board Approval (Beijing 2006) effectively established operating framework for SMPC Guides: Will not constitute a standardWill not constitute a standard –Will provide non-authoritative guidance –Will be an IFAC SMPC publication –Will be subject to a rigorous QC review process –Will not be approved or endorsed by IAASB / IESBA Full copyright will rest with IFACFull copyright will rest with IFAC –All IFAC Member Bodies will have free-of-charge unrestricted rights to use content for their own domestic products Operating framework for Guides

 Guide to ISAs for Use in the Audit of SMEs  Issued Dec 2007  Developed by the Canadian Institute of Chartered Accountants (CICA)  Over 20,000 downloads  CD version also available free-of-charge  IFAC’s 2 nd most popular publication in 2008 (after IFAC Handbook) ISA Guide

 Guide to ISAs for Use in the Audit of SMEs  Member bodies may adapt for local use  ICAA – localized names and references, road- show of training sessions, toolkit of checklists / forms (available for purchase)  MIA (Malaysia) have also adapted ISA Guide  CICA has developed a pack of forms and checklists to accompany the Guide (available for purchase)  A number of translations done or in process; French and Spanish completed ISA Guide

 Around 400 pages  Covers ISAs as at 31 Dec 2006 (as per 2007 IFAC Handbook)  Covers all aspects of the audit process, divided into three phases:  Risk Assessment / Risk Response / Reporting  Integrated case study  Dephta Furniture Inc. – family owned furniture making factory with 19 full time staff, many family members ISA Guide Features

 Updated version expected Q1/2010  Will cover clarified ISAs as per 2009 IFAC Handbook effective for audits of periods beginning ≥ 15 Dec 09  Among other improvements, the clarified ISAs specify more clearly the Objectives, Requirements, and Application and Other Material  36 ISAs: 1 new, 16 revised & redrafted, 19 redrafted  Estimated that there are 30% more requirements in clarified ISAs than in the black letter ISAs  Draft text over 500 pages (from 400), including a second case study based on a micro entity ISA Guide Update

 Volume 1:  Basic concepts of a risk based ISA audit  Directed at practitioners and students with little or no understanding of ISAs  Expected - Approx 225 pages  Volume 2:  Practical guidance for the audit of SMEs  Directed at practitioners with a reasonable working knowledge of ISAs  Expected - Approx 200 pages ISA Guide Update

International Federation of Accountants IFAC SMP Committee Guides ISA Guide QC Guide PM Guide Other

Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information and Other Assurance and Related Services EngagementsQuality Control for Firms that Perform Audits and Reviews of Historical Financial Information and Other Assurance and Related Services Engagements Originally effective as of 15 June 2005Originally effective as of 15 June 2005 Aimed at quality control procedures at the level of the firm, not at engagement level (ISA 220)Aimed at quality control procedures at the level of the firm, not at engagement level (ISA 220) Covering each of the following elements:Covering each of the following elements: –Leadership responsibilities –Ethical requirements –Acceptance and continuance (client & engagement) –Human resources –Engagement performance –Monitoring ISQC1

 Guide to Quality Control for Use by Small- and Medium- sized Practices  Issued March 2009  Developed by CGA-Canada  Over 8,700 downloads (to 15 Sep 2009)  IFAC’s 3rd most popular publication in 2009 (after IFAC Handbook + Code)  A number of translation requests received; French & Spanish completed QC Guide

 Around 160 pages  Deals with redrafted ISQC 1 effective 15 Dec 2009  Integrated case study  M&M – Sole practitioner with 5 staff, none of whom yet qualified as professional accountants  2 sample firm QC policy manuals (customizable)  Sole practitioner with non-professional staff  2 to 5 Partner firm  Some key checklists & forms  Available in Word format for ease of translation, adaptation and customizing QC Guide Features

 General feedback on QC Guide positive  Present Mar 09 version reflected redrafted text  No major interventions considered necessary  Updated version expected Q3/2010  Principally to conform to revised Code of Ethics for Professional Accountants  issued July 2009 and effective 1 Jan 2011  including independence requirements in 290 – 291 QC Guide Update

International Federation of Accountants IFAC SMP Committee Guides ISA Guide QC Guide PM Guide Other

 Guide to Practice Management for Use by Small- and Medium- sized Practices  How to run a successful practice  Admin & management areas common to SMPs  Topics include practice structures, marketing, pricing, retaining and developing personnel, use of technology, succession planning  Being developed by CPA Australia  Plan to issue in Q1 or Q2 / 2010  Free for download - Member bodies / SMPs may adapt for own use PM Guide

International Federation of Accountants IFAC SMP Committee Guides ISA Guide QC Guide PM Guide Other

 Consideration being given to developing ISA Guide training materials (similar to ISA Modules)  Guide for SMPs to the Code of Ethics for Professional Accountants ?  In Oct 09, IAASB released first 6 ISA Modules to assist awareness and understanding of the newly clarified ISAs  Brief video presentation + PowerPoint + speaker notes  IESBA also developed PowerPoint presentations with speaker notes, and other documents to support implementation of the revised Code Other

  Under ‘Resources’:  Translations database  IAASB Clarity Centre – ISA Modules  Speeches  Publications  Discussion board  Relevant links; and more IFAC International Center for SMPs