International Assurance Standard Released for Service Organizations, U.S. Equivalent Slated for Vote in January


The International Auditing and Assurance Standards Board (IAASB) on Friday released a new standard that addresses reports on the description, design and operating effectiveness of controls relating to outsourced services ranging from assisting with processing transactions to performing one or more business functions.


International Standard on Assurance Engagements (ISAE) 3402, Assurance Reports on Controls at a Service Organization, is effective for service auditors’ reports covering periods ending on or after June 15, 2011.


The IAASB is an independent standard-setting body organized under the International Federation of Accountants (IFAC). The (U.S.) Auditing Standards Board (ASB) has worked jointly  with the IAASB on this project and plans to approve  a similar, parallel standard for service organizations in January, according to Charles E. Landes, AICPA vice president for professional standards and services (click here to view the ASB exposure draft).  


The U.S. standard will amend and replace the current U.S. standard for audits of service organizations, Statement on Auditing Standards no. 70 ( AU Section 324), Service Organizations. The PCAOB also adopted AU Section 324, subject to additional guidance in Appendix B, paragraphs 17-27 in PCAOB Auditing Standard no. 5, An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements.


In other parts of the world, 71 jurisdictions currently use international auditing standards (ISAs), according to IFAC. An additional 55 jurisdictions, including the U.S., have partially adopted ISAs or are in the process of aligning their national standards with ISAs.


—Matthew G. Lamoreaux ( is a JofA senior editor.




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