International


INTERNATIONAL
The International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), proposed three new standards; two would focus on enhancing auditors’ consideration of controls at service organizations and a third would address communicating deficiencies in internal control to those charged with governance.

Following a risk-based approach, proposed International Standard on Auditing (ISA) 402 (Revised and Redrafted), Audit Considerations Relating to an Entity Using a Third Party Service Organization , deals with the auditor’s responsibilities to obtain audit evidence when an entity uses one or more service organizations. This may include obtaining reports prepared by the auditors of those organizations.

Proposed International Standard on Assurance Engagements (ISAE) 3402, Assurance Reports on Controls at a Third Party Service Organization , is the first subject matter-specific standard developed under the IAASB’s International Framework for Assurance Engagements . Reports prepared in accordance with proposed ISAE 3402 will be capable of providing appropriate audit evidence under proposed ISA 402 (Revised and Redrafted).

The IAASB also is seeking comments on proposed ISA 265, Communicating Deficiencies in Internal Control, which deals with the auditor’s responsibility to communicate to management and those charged with governance deficiencies in internal control that have been identified by the auditor. It distinguishes between significant and other deficiencies in order to establish requirements to communicate to the appropriate levels within the audited entity.

Comments on proposed ISA 402 (Revised and Redrafted) and proposed ISA 265 are due April 30. Comments on proposed ISAE 3402 are due May 31. The exposure drafts are available at www.ifac.org/EDs.

The International Accounting Education Standards Board, an independent standard-setting board of IFAC, released guidance to assist its member organizations and others in establishing effective practical experience programs. The new guidance is contained in International Education Practice Statement (IEPS) 3, Practical Experience Requirements—Initial Professional Development for Professional Accountants. IEPS 3 provides guidance on the period of practical experience, content of practical experience requirements, and the roles and responsibilities of IFAC members as well as mentors and employers.

The practice statement suggests how IFAC members and associates may meet the requirement for a period of practical experience for trainees to qualify as professional accountants. It also explains how workplace output can be used to assess competence developed by trainees during that period. The guidance can be downloaded for free from the IFAC online bookstore at www.ifac.org/store.

The trustees of the International Accounting Standards Committee (IASC) Foundation, the oversight body of the International Accounting Standards Board (IASB), published amendments to the IASC Foundation’s constitution that enlarge the International Financial Reporting Interpretations Committee (IFRIC) to 14 members from 12 members and amend the quorum and voting requirements accordingly. The changes are intended to give IFRIC membership greater diversity of practical experience, according to a press release. To view the amended constitution visit www.iasb.org/About+Us/About+the+Foundation/Constitution.htm.

The International Accounting Standards Board (IASB) published an exposure draft of proposed amendments to International Financial Reporting Standard (IFRS) 2, Share-Based Payment , and International Financial Reporting Interpretations Committee (IFRIC) 11 IFRS 2, Group and Treasury Share Transactions. The proposals respond to requests for guidance on how a group entity that receives goods or services from its suppliers (including employees) should account for the following arrangements:

Arrangement 1. The entity’s suppliers will receive cash payments that are linked to the price of the equity instruments of the entity.

Arrangement 2. The entity’s suppliers will receive cash payments that are linked to the price of the equity instruments of the entity’s parent.

Under either arrangement, the entity’s parent has an obligation to make the required cash payments to the entity’s suppliers. The entity itself has no obligation to make such payments. The proposed amendment to IFRS 2 clarifies that IFRS 2 applies to arrangements such as those described above even if the entity that receives goods or services from its suppliers has no obligation to make the required share-based cash payments. The proposed amendment to IFRIC 11 specifies that the entity should measure the goods or services in accordance with the requirements for cash-settled share-based payment transactions. To download the ED, visit www.iasb.org/Open+to+Comment.htm. Comments are due by March 17.

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