Closed Session 2 - Track B

International Standards on Auditing:

Adoption and Implementation Challenges and Tools

Prof. Arnold Schilder, IAASB Chairman

29 October 2012

Key Features of the Clarified ISAs•Principle-based and emphasize the use of professional judgment and professional skepticism, i.e., a “thinking audit”

•More robust with strengthened requirements in key areas:– Risk assessment (e.g., estimates and related parties)– Materiality and its use in evaluating misstatements– Audit evidence (e.g., confirmations and representations)– Using the work of others (e.g., group audits and experts)– Auditor reporting and communications (including with those

charged with governance)

Global Adoption of Clarified ISAs – Where Are We Now?

Proportionality of ISAs for SME/SMPs•Application of ISAs designed to be proportionate in view of size, nature and complexity of entities

− Proportionality ≠ modification of requirements

•Requirements are not prescriptive − Application material highlights specific SME considerations and alternative

procedures

•IAASB Staff Questions and Answers (Staff Q&A)− Applying ISAs Proportionately with the Size and Complexity of an Entity− Applying ISQC 1 Proportionately with the Nature and Size of a Firm (to be released

end of October/early November 2012)

•IFAC SMP Committee’s Guides− Using ISAs in the Audits of SMEs− Quality Control for SMPs, etc.

ISA Implementation Resources•ISA video modules and slides

– Raise awareness and understanding of main thrust of clarified ISAs and significant changes – free to download and translate

•Staff Q&A: Professional Skepticism in an Audit•International Auditing Practice Note 1000: Auditing Financial Instruments•Staff publications, FAQs, etc. at IAASB Clarity Center (www.iaasb.org)•ISAs available in single “Spanish” translation and in other languages

ISA Implementation Monitoring Project• Initiative to gather information about the implementation of ISAs

− Key areas of focus are consistency, effectiveness, efficiency− Findings will inform future strategy