The international financial reporting interpretations
committee of the International Accounting Standards Board released in
March draft interpretation D5, Applying IAS 29, Financial
Reporting in Hyperinflationary Economies for the First Time (
www.iasb.org/uploaded_files/documents/8_39_ifric-d05.pdf ). The
proposed interpretation contains guidance on how an entity should
restate its financial statements in the first year it identifies
hyperinflation in the economy of its functional currency. Comments are
due May 14.
The international auditing and assurance standards board
(IAASB) of the International Federation of Accountants in February
issued a revised international standard on auditing (ISA) requiring
auditors to be more proactive in considering the risk of fraud in
financial statements (
www.ifac.org/store/ ). The Auditor’s Responsibility to
Consider Fraud in the Audit of Financial Statements builds on
the audit risk standards the board issued in 2003 and requires the
auditor to focus on areas where there is a risk of material
misstatement due to fraud, including management fraud. The revised
standard is effective for audits of financial statements for periods
beginning on or after December 15, 2004.
The board also issued two quality control standards directed to both audit firms and engagement teams. The first, International Standard on Quality Control 1 (ISQC1), establishes a firm’s responsibility to set up and maintain a system of quality control for all audit and assurance engagements ( www.ifac.org/store/ ). The second, ISA 220, Quality Control for Audits of Historical Financial Information, establishes standards for the specific responsibilities of firm personnel for an individual audit engagement, based on the quality control requirements in ISQC1 ( www.ifac.org/store/ ). Both quality control standards are effective June 15, 2005.
