During its December 2020 meeting, the IAASB held its first public discussions on the draft of a separate standard being developed for an audit of less complex entities and the official project proposal to complete and publish the draft standard for public consultation in 2021. The IAASB approved the project proposal and early draft.
Following these decisions, the IAASB today published a new communique detailing plans for the new standard, including current thinking on what the standard will look like, what entities it will apply to, and the development timeline.
For additional information on the IAASB’s efforts to balance the needs of all its stakeholders by addressing complexity, understandability, scalability and proportionality in the International Standards on Auditing, please see its November 2020 communique.
The International Auditing and Assurance Standards Board (IAASB) today released its three quality management standards. The standards promote a robust, proactive, scalable and effective approach to quality management and mark a significant evolution of the existing quality control standards.
“These standards will drive the audit profession to an enhanced approach to quality ‘management’ rather than ‘control’, which better enables the consistent performance of quality engagements, including audits,” according to IAASB Chair Tom Seidenstein. “The standards place greater responsibility on firm leadership for continuously improving the quality of their engagements and remediating when deficiencies are found. When effectively implemented, the standards should help ensure that a commitment to quality is at the heart of firm strategy and operations.”
The suite of standards includes:
International Standard on Quality Management (ISQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements;
ISQM 2, Engagement Quality Reviews; and
International Standard on Auditing 220 (Revised), Quality Management for an Audit of Financial Statements.
The standards become effective on December 15, 2022.
The IAASB has also developed Bases for Conclusions and factsheets to support the implementation of the new standards, which are available on the IAASB’s website. Additional support materials will be published in 2021.
About the IAASB The International Auditing and Assurance Standards Board develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.
New, Revised Standards Strengthen, Modernize Approach to Quality Management
IFAC is submitting this comment letter to accelerate the journey towards a coherent global system for reporting sustainability information.
In answer to the fundamental issues at stake—is there a need for a global set of internationally recognized sustainability reporting requirements and should the IFRS Foundation play a leading role through the establishment of a new sustainability standards board—IFAC believes, based on extensive stakeholder outreach, that the answer is a resounding “Yes.”
The IPSASB has issued Non-Authoritative Amendments to IPSAS 41, Financial Instruments.
This pronouncement provides additional non-authoritative guidance in IPSAS 41, Financial Instruments, to clarify the requirements for classifying, recognizing, and measuring public sector specific financial instruments.
ISA 220 (Revised) deals with the engagement partner and engagement team’s responsibilities for quality management for an audit of financial statements. The revised standard modernizes the approach to quality management and requires the engagement partner and engagement team to be proactive in managing and achieving quality.
ISA 220 (Revised) is effective for audits of financial statements for periods beginning on or after December 15, 2022.
ISQM 1 strengthens firms’ systems of quality management through a robust, proactive and effective approach to quality management. The standard encourages firms to design a system of quality management that is tailored to the nature and circumstances of the firm and engagements it performs. ISQM 1 applies to all firms that perform engagements under the IAASB’s international standards. ISQM 1 replaces ISQC 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements and Other Assurance and Related Services Engagements.
ISQM 2 deals with the appointment and eligibility of the engagement quality reviewer, and the engagement quality reviewer’s responsibilities relating to the performance and documentation of an engagement quality review. ISQM 2 applies to all engagements for which an engagement quality review is required to be performed in accordance with ISQM 1.
The outbreak of COVID-19 and the subsequent economic recession have required substantial and rapidly deployed government interventions across the world. IFAC and the MOSAIC Steering Committee partners are delighted to host the Building Resilient and Sustainable Economies Forum, which will be held online December 7 - 11, 2020.
What if we could see into the future? What if today we could know the events and forces that will shape our profession? What if we could design learning and development programs to not only prepare accountants for today’s challenges but also to anticipate tomorrow’s challenges?
Together with ICAEW, The International Federation of Accountants (IFAC) today released the third installment in its Anti-Money Laundering: The Basics educational series: Installment 3: Company Formation.
The publication is part of a 6-month short series helping accountants enhance their understanding of how money laundering works, the risks they face, and what they can do to mitigate these risks and make a positive contribution to the public interest. Installment three examines company formation, one of the services performed by professional accountants that is most susceptible to money laundering risk.
Anti-Money Laundering: The Basics is featured on both the IFAC and ICAEW websites and available for download for free. With installment three, IFAC is featuring the series on a new landing page alongside other relevant information on anti-money laundering (AML).
To be globally relevant, the Anti-Money Laundering: The Basics series uses the risk-based approach of the Financial Action Task Force (FATF) – the global money laundering and terrorist financing watchdog -- as a starting point.
For more information about IFAC, visit www.ifac.org.
