International Federation of Accountants IAASB Update DAVID CHITTY Member: IFAC SMP Committee Chairman: Accounting & Assurance Committee, Horwath International IFAC SMP Forum: 13 October, 2008 Abuja, Nigeria

SMP and SME Issues: Audit and Assurance IAASB Clarity Project UpdateIAASB Clarity Project Update IAASB StrategyIAASB Strategy IFAC’s ISA Guide and Other GuidesIFAC’s ISA Guide and Other Guides Participating in IAASB ProjectsParticipating in IAASB Projects Keeping up with IAASB DevelopmentsKeeping up with IAASB Developments 2

SMP and SME Issues: Audit and Assurance IAASB Clarity Project Update Clarification complete end 2008 Effective date: Audits for periods beginning on or after 15 Dec

SMP and SME Issues: Audit and Assurance IAASB Clarity Project Update First redrafted ISAs focused on fundamentals … – –Risk fraud, quality control, documentation, reporting Recent efforts focused on higher risk areas… – –Estimates, fair values, related party transactions, groups 4

SMP and SME Issues: Audit and Assurance IAASB Clarity Project Update All ISAs redrafted to enhance clarity and eliminate ambiguity about ‘present tense statements’ must beRequirements must be applicable in ‘virtually all cases’ About 60% increase in requirements, as expected, BUT most of this in existing ‘grey letter material’ 5

SMP and SME Issues: Audit and Assurance IAASB Clarity Project Update Considerations specific to audits of SMEs – –Highlighted in application material – –Incorporates guidance from existing material – –Additional guidance as appropriate 6

SMP and SME Issues: Audit and Assurance IAASB Clarity Project Update Significant REVISED ISAs include – –Overall objective of the auditor (ISA 200) – –External confirmations (ISA 505) – –Estimates and fair values (ISA 540) – –Related parties (ISA 550) – –Use of experts (ISA 620) – –Group audits (ISA 600) 7

SMP and SME Issues: Audit and Assurance IAASB Strategy Strategic focus Development of standards for capital markets and SMEs Adoption: monitoring and facilitating Responding to concerns about implementation 8

SMP and SME Issues: Audit and Assurance IAASB Strategy Priorities for for SMPs include Revision of ISRE 2400 (review engagements): group of NSS from New Zealand, Canada and South Africa published consultation paper in September to assist IAASB’s consideration of issues (please comment) Provision of implementation support; several initiatives being considered 9

SMP and SME Issues: Audit and Assurance IAASB Strategy Other priorities for Pro forma financial information Carbon emissions information Fair value auditing implementation guidance Impact assessments XBRL Research on auditors’ reports 10

SMP and SME Issues: Audit and Assurance IFAC’s ISA Guide and Other Guides ISA Guide published Dec 2007; developed by Canadian Institute of Chartered Accountants Based on ‘unclarified’ ISAs Popular download (12,000+) Free for use by all CD version available for free on request Many translations in progress Clarity version to arrive soon 11

SMP and SME Issues: Audit and Assurance IFAC’s ISA Guide and Other Guides Non-authoritative implementation guide – –Not SME audit standard Covers all ISA requirements – –But not a substitute for ISAs Integrated case study and some practice aids – –Not a full set of audit programs 12

SMP and SME Issues: Audit and Assurance IFAC’s ISA Guide and Other Guides Canadian Institute has launched forms and checklists for sale to practitioners – – Australian Institute (ICAA) has adapted ISA Guide and supplemented it with toolkit – – 13

SMP and SME Issues: Audit and Assurance IFAC’s ISA Guide and Other Guides Quality Control guide: Q1 2009, CGA Canada Practice Management Guide: Q4 2009, Australian Institute 14

SMP and SME Issues: Audit and Assurance IFAC’s ISA Guide and Other Guides IFAC’s International Center for SMPs: news, information, resources IFACNet: global accountancy search engine SMP/SME discussion board on IFAC website

SMP and SME Issues: Audit and Assurance Participating in IAASB Projects SMPs represented on IFAC Board, IAASB and IAASB’s CAGSMPs represented on IFAC Board, IAASB and IAASB’s CAG Exposure drafts of proposed standards – –Views of SMPs and developing nations actively sought – –Regional member bodies strongly encouraged to comment 16

SMP and SME Issues: Audit and Assurance Keeping up with IAASB Developments Wealth of information on IAASB website ISAs Handbook downloadable free-of-charge Recently released ISAs individually available Exposure drafts and comment letters Audio recordings of IAASB meetings IAASB papers in advance of meetings Special communications such as clarity updates Subscription to free quarterly IAASB and SMP e- News at

International Federation of Accountants October