The International Auditing and Assurance Standards Board (IAASB) released as final its first four International Standards on Auditing (ISAs), which were redrafted as part of a comprehensive program to enhance the clarity of its standards.
The IAASB, an independent board of the International Federation of Accountants, also approved amendments to the Preface to International Standards on Quality Control, Auditing, Review, Other Assurance and Related Services, which sets conventions for the IAASB to use in drafting ISAs and obligations for auditors who follow those standards. The revisions are intended to clarify standards with a goal of promoting consistent application by auditors worldwide.
The four redrafted standards include:
ISA 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements.
ISA 300, Planning an Audit of Financial Statements.
ISA 315, Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and Its Environment.
ISA 330, The Auditor’s Responses to Assessed Risk.
The redrafted standards have a provisional effective date for audits of financial statements for periods beginning on or after Dec. 15, 2008. The ISAs are available for free at the IFAC online bookstore at www.ifac.org/store.
An IASB proposal would relieve parent companies of some of the difficulties in measuring the cost of an investment in a subsidiary upon adoption of International Financial Reporting Standards (IFRS).
IASB Chairman Sir David Tweedie said the proposals address “preparers’ concern about a requirement that they regard as an obstacle to adopting IFRS.” Tweedie said the changes would reduce burdens on preparers while still providing useful information to users of financial statements.
The amendments to IFRS 1, First-Time Adoption of International Financial Reporting Standards, would provide some relief from the requirements of IAS 27, Consolidated and Separate Financial Statements, by allowing a parent company to use a deemed cost to measure its investment in subsidiaries when it first adopts IFRS. This deemed cost can be determined by referring to the parent’s investment in the net assets of the subsidiary or the fair value of the parent’s investment. The proposals also alleviate the need to restate the pre-acquisition accumulated profits of a subsidiary for the purposes of classifying dividends.
The ED is available at www.iasb.org. Comments are due by April 27.
The IASB extended until May 4 the comment deadline on its discussion paper Fair Value Measurements that was published in November. Constituents had asked for more time, given the significance of issues raised in the paper, said an IASB statement. The discussion paper is part of the IASB’s fair value measurement project, which is included in the IASB’s memorandum of understanding with FASB on the convergence of U.S. GAAP and IFRS. The objective of the project is to develop a single set of guidance that will apply to all fair value measurements required by IFRS.