IFAC Issues Bank Audit ED and Cost Accounting Study

The International Federation of Accountants is seeking responses to a proposed international auditing statement that will provide practical assistance to auditors in applying international standards when they audit commercial banks.

Special considerations arise in bank audits because of the nature of the risks associated with bank transactions, the banks’ dependence on computerized systems and the effects of regulations in the varied jurisdictions in which they operate. The exposure draft (ED), The Audit of International Commercial Banks, emphasizes matters that are peculiar to, or of particular importance in, an audit and includes examples of typical internal control and substantive audit procedures for a bank’s lending and treasury operations.

The proposed guidance also illustrates financial ratios commonly used in analyzing a bank’s financial condition and performance; risks and issues in securities operations, private banking and asset management; and warning signs of fraud.

According to Dietz Mertin, chairman of the international auditing practices committee, the ED defines the auditor’s role in bank audits and examines the special reporting relationships between auditors and bank supervisory staff and regulatory authorities.

Comments on the ED, which may be downloaded from, are due January 31.

Guidance provided to government accountants

In September IFAC issued a study intended to help government financial aid officers and accountants develop and implement cost accounting in a government environment.

Perspectives on Cost Accounting for Governments describes the extent of government uses of, and the impact of accounting standards on values used in, cost accounting and explains how cost concepts can be employed to achieve management objectives.

While in the past cost accounting was viewed as a simple mechanical process for which the accountant was wholly responsible, today it is considered a useful tool for providing information to senior managers for their decision making.

Ian Mackintosh, IFAC public sector committee chairman, points out that the guidance was necessary because “although great similarities exist between the public and private sectors, a number of governmental cost accounting issues have not been dealt with comprehensively in the current literature.”

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