Mr. Martin Baumann has been appointed Chair of the International Auditing and Assurance Standards Board (IAASB) for a three-year term beginning January 1, 2019. Mr. Baumann’s appointment was recommended by the Interim Nominating Committee after an extensive international search. The IFAC Board endorsed the Interim Nominating Committee’s recommendation, which was approved by the Public Interest Oversight Board (PIOB), which oversees the IAASB's activities. The Monitoring Group was informed of the recommendation.

“Martin Baumann is a leader who brings vision, a passion for the public interest and a depth of experience to the role of IAASB Chair," said Ryozo Himino, Interim Nominating Committee Chair. "As its next Chair, he will lead the IAASB during an important period of innovation and change as well as continuing the Board’s work developing high-quality international audit, assurance, quality control and related services standards that are accepted and used around the world."

As Chair, Mr. Baumann will lead the IAASB though an environment of rapid advances in current and emerging technology and changes in the breadth and complexity of information needed by investors and other stakeholders. He will be responsible for leading the finalization and implementation of IAASB’s strategic objectives; actively engaging key stakeholders around the world, including national standard setters, regulators, investors and firms of all sizes; and delivering timely high-quality standards in the public interest.

"The IAASB plays a vital role in the world's capital markets. High-quality professional standards developed in the public interest by the IAASB provide the markets with confidence in the important work done by auditors,” said Mr. Baumann. “I am committed to working tirelessly to ensure the IAASB meets its mandate, and continues to be recognized as a highly-regarded independent organization developing high-quality standards."

Mr. Baumann most recently served as Chief Auditor and Director of Professional Standards at the Public Company Accounting Oversight Board (PCAOB), where, with the Board, he was responsible for establishing auditing and related professional practice standards for audits of all companies registered with the US Securities and Exchange Commission. He also chaired the PCAOB’s Standing Advisory Group and served on the IAASB and International Ethics Standards Board for Accountants Consultative Advisory Groups. Previously he was Chief Financial Officer for Freddie Mac and a senior partner at PricewaterhouseCoopers.

Mr. Baumann succeeds Prof. Arnold Schilder, whose term as IAASB Chairman concludes after a decade of service at the end of 2018. Prof. Schilder has led the IAASB with distinction, from new landmark assurance standards addressing key aspects of sustainability reporting, to innovative and groundbreaking new auditor reporting standards, to enhancements now underway to the standards that seek to fundamentally improve audit. There are now nearly 130 jurisdictions around the world using or in the process of adopting the clarified International Standards on Auditing. Mr. Baumann will work closely with the current Chair commencing October 29, 2018 to allow for a smooth transition.

The Interim Nominating Committee was formed by the Monitoring Group in February 2018 to conduct the process for the next IAASB Chair. The Committee was chaired by Ryozo Himino, Vice Minister for International Affairs, Financial Services Agency (Japan), and was comprised of four other members including Guy Andrade, Huguette Labelle, Lord Jonathan Hugh Mance and Sir David Tweedie, and two observers, Rachel Grimes and Eddy Wymeersch. The Interim Nominating Committee followed an open and transparent process to select the most suitable candidate for the position. It will disband now that its mandate has been completed.

For more information about the work of the IAASB, visit its home page at www.iaasb.org.

About the IAASB
The IAASB 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.

The International Public Sector Accounting Standards Board^® (IPSASB^®) has released IPSAS 41, Financial Instruments.

IPSAS 41 substantially improves the relevance of information for financial assets and financial liabilities. It will replace IPSAS 29, Financial Instruments: Recognition and Measurement, and improves that Standard’s requirements by introducing:

• Simplified classification and measurement requirements for financial assets;
• A forward looking impairment model; and
• A flexible hedge accounting model.

“The significance of government debt to global capital markets can often be ignored,” said IPSASB Chair Ian Carruthers. “IPSAS 41 is a major step forward in accounting for financial instruments, and responds to the problems with IPSAS 29 that were exposed by the global financial crisis. It provides principles that appropriately reflect the economics of transactions involving financial instruments, replacing the more rules-based approach of its predecessor.”

IPSAS 41 is based on International Financial Reporting Standard (IFRS) 9, Financial Instruments, developed by the International Accounting Standards Board (IASB®), but it also includes public sector-specific guidance and illustrative examples on:

• Financial guarantees issued through non-exchange transactions;
• Concessionary loans;
• Equity instruments arising from non-exchange transactions; and
• Fair value measurement.

About the IPSASB
The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through the development of accrual-based International Public Sector Accounting Standards® (IPSAS®) and other guidance for use by governments and other public sector entities. It receives support from the Asian Development Bank, the Chartered Professional Accountants of Canada, the New Zealand External Reporting Board, and the governments of Canada and New Zealand. The structures and processes that support the operations of the IPSASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org. 

About the Public Interest Committee
The governance and standard-setting activities of the IPSASB are overseen by the Public Interest Committee (PIC), to ensure that they follow due process and reflect the public interest. The PIC is comprised of individuals with expertise in public sector or financial reporting, and professional engagement in organizations that have an interest in promoting high-quality and internationally comparable financial information.

The International Ethics Standards Board for Accountants^® (IESBA^®) today released new enhancements to its global ethics code which address more fully the responsibilities of professional accountants around the offering and accepting of inducements.

The revised standard sets out a comprehensive framework that more clearly delineates the boundaries of acceptable inducements, and guides the behavior and actions of professional accountants in business and in public practice in situations involving inducements.

“Incentives motivate behavior, and some inducements can be a powerful incentive to unethical behavior,” said IESBA Chairman Dr. Stavros Thomadakis. “This revised standard complements our standard on NOCLAR to offer a full system of ethical defenses that relate both to malfeasance committed by others and to accountants’ own involvement in potentially unethical behaviors.”

Central to this framework is a new intent test that prohibits the offering or accepting of inducements where there is actual or perceived intent to improperly influence the behavior of the recipient or of another individual. The framework also:

• Clarifies the meaning of an inducement;
• Establishes a requirement to understand and comply with laws and regulations that prohibit the offering or accepting of inducements in certain circumstances, such as in relation to bribery and corruption;
• Guides professional accountants in applying the enhanced conceptual framework underpinning the International Code of Ethics for Professional Accountants (including International Independence Standards) where there is no improper intent; and
• Provides enhanced guidance on the offering and accepting of inducements by professional accountants’ immediate or close family members.

The revised provisions become effective June 2019, including consequential amendments to the independence provisions of the Code addressing gifts and hospitality. The changes constitute the last piece of the recently revised and restructured Code.

About the IESBA

The IESBA is an independent standard-setting board that develops and issues, in the public interest, high-quality ethical standards and other pronouncements for professional accountants worldwide. Through its activities, the IESBA develops the International Code of Ethics for Professional Accountants^TM (including International Independence Standards^TM), which establishes ethical requirements for professional accountants. The structures and processes that support the operations of the IESBA are facilitated by IFAC. Please visit www.ethicsboard.org for more information, and follow us on Twitter @Ethics_Board.

IFAC (International Federation of Accountants) and the International Bar Association (IBA) today announce their shared commitment to continue their work combating corruption in all its forms. Published ahead of the gathering of global economic leaders (G20), taking place in Buenos Aires, Argentina, the signed IBA and IFAC Anti-Corruption Mandate highlights the role of business and government in safeguarding a fair and transparent future for all.

“Grounded in a strong ethical code, professional accountants across the globe play a critical role in the fight against corruption, bringing essential transparency, relevance and integrity to the systems that underpin vibrant economies,” says IFAC CEO Fayezul Choudhury. “We are proud to partner with the IBA to highlight and advance the role of our global professions in serving the public interest now and in the future.”

According to the International Monetary Fund, bribery, which is just one aspect of corruption, costs the global economy nearly $2tn – approximately two per cent of global GDP – each year. However, where governance architecture is strong, the role played by professional accountants in tackling corruption is amplified, such as in G20 countries and in countries that have adopted anti-money laundering laws in line with international recommendations.

The presence of professional accountancy organizations is another important factor, as they advance the adoption of ethical, educational, investigation and discipline requirements that are central to the profession. According to research from IFAC, there is a strong link between the percentage of professional accountants in the workforce and more favorable scores on the main global measure of corruption.

Mark Ellis, IBA Executive Director, commented: “Corruption is a significant impediment to economic stability and development, tarnishing public trust in institutions and inhibiting citizens’ access to opportunities and prosperity. With empirical research that demonstrates the world’s poor pays the highest percentage of their income in bribes, the imminent meeting of the G20 Finance Ministers and Central Bank Governors presents an important opportunity to remind leaders that every stolen dollar, euro, lira, peso, pound, rand, real, rouble, rupee, yen or yuan robs someone of an equal opportunity in life, and that everyone has a responsibility to combat corruption. The IBA-IFAC cross-sector collaboration aims to reinforce the role and responsibility of international professions to tackle corruption, and we are delighted to be partnering with IFAC.”

In all its variations, corruption has far reaching negative consequences, including when money is misappropriated through illicit financial flows that can lead to the funding of organized high level crimes such as drug trafficking, human trafficking and terrorism.

The international accountancy and legal professions continue to promote core ethical values, facilitate national and international cooperation in the fight against corruption, and advance monitoring and enforcement systems in the public interest. With the IBA and IFAC global membership spanning more than 170 countries, they play a vital role in training, educating and supporting professionals to uphold the highest levels of integrity and ethics in business.

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of more than 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.

About the International Bar Association
The International Bar Association (IBA), established in 1947, is the world’s leading organisation of international legal practitioners, bar associations and law societies, spanning more than 170 countries. It is comprised of specialist committees relating to practice areas of law, including the Anti-Corruption Committee and the Anti-Money Laundering Committee. Through its global membership of individual lawyers, law firms, bar associations and law societies, the IBA influences the development of international law reform and shapes the future of the legal profession throughout the world.

Small- and medium-sized practices (SMPs) may require practical support when implementing the International Standards on Auditing (ISAs) in audits of small- and medium-sized entities (SMEs). IFAC (International Federations of Accountants) has updated the Guide to Using ISAs in the Audits of SMEs, Fourth Edition (the Guide) to help firms efficiently and proportionally apply ISAs on SME audits.

This fourth edition is updated to reflect recent changes to the ISAs including International Auditing and Assurance Standards Board (IAASB) projects on:

• Auditor Reporting;
• Disclosures;
• The Auditor’s Responsibilities Relating to Other Information; and
• Using the Work of Internal Auditors.

The Guide is designed for use by all practitioners. Volume 1 covers the fundamental concepts of a risk-based audit in conformance with the ISAs. Volume 2 contains practical guidance on performing SME audits, including two illustrative case studies—one of an SME audit and one of a micro-entity audit.

Since it was first published in 2007, the Guide has been downloaded over 100,000 times and there are 22 translations completed or in progress. To help facilitate additional translations, IFAC Members can request a Word version of the Guide with tracked changes.

Many firms use the Guide for training purposes and as the basis for firm manuals. In order to help them and our member organizations maximize the Guide’s use, IFAC has also updated the Companion Manual which provides practical ‘best use’ suggestions for the Guide.

IFAC has a long history of developing implementation support for international standards. In addition to the Guide, the extensive suite of material includes:

• Guide to Quality Control for Small- and Medium-Sized Practices, Third Edition
• Guide to Review Engagements
• Guide to Compilation Engagements
• Agreed-Upon Procedures (AUP) Engagements A Growth and Value Opportunity
• Choosing the Right Service: Comparing Audit, Review, Compilation, and Agreed-Upon Procedure Services

The International Auditing and Assurance Standards Board (IAASB) seeks public comment by November 2, 2018 on Exposure Draft, ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement.

To ensure that International Standards on Auditing continue to form the basis for high-quality, valuable and relevant global audits, the IAASB proposes more robust requirements and improved guidance to:

• Drive consistent and effective identification and assessment of risks of material misstatement;
• Modernize ISA 315 to meet evolving business needs, including information technology, and how auditors use automated tools and techniques, including data analytics, to perform audit procedures;
• Improve the standard’s applicability to entities across a wide spectrum of circumstances and complexities; and
• Focus auditors on exercising professional skepticism throughout the risk identification and assessment process.

Through its ISA Implementation Monitoring Project and targeted continuing stakeholder outreach, the IAASB has received significant stakeholder input as the proposed revisions have been developed. The Exposure Draft is a key element of the IAASB’s work to address the fundamental elements of an audit and thereby enhance audit quality.

The International Auditing and Assurance Standards Board (IAASB) invites all interested stakeholders to its global series of discussions to help shape the future of assurance over emerging forms of external reporting (EER).

Save the Dates!

Please see below for event locations most convenient for you:

Why you should attend

The IAASB is developing non-authoritative guidance to address key challenges arising in the performance of assurance engagements over EER performed using its assurance standard, ISAE 3000 (Revised).

To help shape the future of IAASB’s assurance over EER, the half-day discussions will cover:

• progress in the development of the first phase of the draft guidance;
• implications of the guidance for assurance engagements; and
• assurance issues faced in your region.

Who should attend

The events are open to all. The IAASB wants to engage with those who prepare EER reports, assurance practitioners, regulators, standard-setters, investors and other users of EER reports. Accountants and non-accountants alike are encouraged to attend and participate to help shape the IAASB’s work in this area.

How to register

To express initial interest, please email IAASBmeetings@iaasb.org with your name, organization, country and the event you would like to attend. We will then notify you when registration opens. For updates, please visit our website and follow us at @IAASB_News and #EERassurance.

What is EER?

EER encapsulates many different forms of reporting, including, but not limited to, integrated reporting, sustainability reporting and non-financial reporting about environmental, social and governance matters. Such reports may be prepared under legislative or regulatory requirements and established frameworks, standards and guidance issued by international or national standard setters.

Further details can be found in a discussion paper, the related feedback statement, and the project proposal.

High-quality reporting should transparently demonstrate how organizations preserve and create value over time. As a global advocate for integrated reporting, IFAC’s 2017 annual review is designed to offer information on our financial, human, social and intellectual capitals alongside our strategic objectives, governance arrangements and financial highlights. It also describes how we strengthen organizations and enhance economies by supporting and empowering our member organizations and the global accountancy profession in the public interest.

This review is part of our 2017 suite of reporting, which also comprises our Financial Statements for the year ended December 31, 2017. With this annual review, we are continuing a journey of more fully implementing the integrated reporting principles and concepts IFAC advocates for globally—those set out in the International Integrated Reporting Council’s Integrated Reporting Framework.

The International Auditing and Assurance Standards Board (IAASB) has started the consultation process about its future strategy. Today it releases a Strategy Survey to seek views and insights from its stakeholders on emerging developments and trends that are likely to be important to its 2020-2023 strategy.

The survey serves as an important tool to help identify key issues for consideration in developing its future strategy in the context of the IAASB’s broad strategic focus and the changing environment, and with the overriding objective of serving the public interest.

The input from the survey will help inform the development of a Consultation Paper on the IAASB’s 2020-2023 strategy, expected to be published at the end of 2018. 

The IAASB is looking to obtain the views of its stakeholders on areas of future focus as the IAASB continues its work on current projects, including revisions of the standards on auditing accounting estimates; identifying and assessing risks of material misstatement; and quality control for firms and audit engagements, and undertakes work on agreed upon procedures engagements and emerging forms of external reporting. 

The IAASB seeks input from all interested stakeholders. The survey will remain open until July 24, 2018. French and Spanish translations will be available on the IAASB's website next week.

Small- and medium-sized practices (SMPs) in a digital, globalized world need to adopt "good practices" to best serve their clients. IFAC (International Federations of Accountants) has released an updated publication—the Guide to Practice Management for Small- and Medium-Sized Practices Fourth Edition (the Guide) to help SMPs meet this challenge. The Guide will help SMPs improve their management and operational efficiency and support their sustainability and success.

Now in its fourth edition, the Guide is organized into eight stand-alone modules, including a new module on Leveraging Technology. The revised Guide addresses a comprehensive range of topics including:

• Strategic planning;
• Managing staff;
• Client relationship management;
• Risk management; and
• Succession planning.

The new Leveraging Technology module covers how technology developments are fundamentally changing the way organizations operate and recognizes that SMPs must adapt to service their clients that utilize technology. Included are topics such as developing a technology strategy, hardware and software options, technology risks, new and emerging technologies, and leveraging technology for practice innovation.

In order to help IFAC member organizations and practices maximize the Guide’s use, IFAC has updated the Companion Manual, which provides suggestions on making best use of the Guide.