IFAC - Audit & Assurance

Accounting firms offer a wide range of professional services to their clients, including audit, review, other assurance, and related services. These services are regulated, with many jurisdictions requiring compliance with international standards or national requirements that have been based on international ones. The type of service delivered depends both on the statutory requirements and what will provide the most value to the client and users of the financial information. An independent audit is an important service for providing users with assurance on entities’ historical financial statements. It is widely acknowledged that high-quality audits directly benefit businesses and indirectly benefit the economy and society in general. Company audits can have a significant influence on investment decisions, are integral to investor confidence, and are considered to be vital to the effective functioning of capital markets. The audit is also a highly valued service with the insights provided often making a real difference to entities’ operations, risk management, and internal controls. As part of an effort to reduce compliance costs with regulation, there is evidence of a global trend toward exempting entities operating within certain thresholds from the requirement to have a statutory audit. It is likely that this changing global landscape will result in a rise in the demand and provision of practitioners offering a wider range of other assurance and related services, particularly among small- and medium-sized practices (SMPs), whose clients are predominately small- and medium-sized entities (SMEs) and often fall within the limits for exemption. These services have an important role in enhancing the credibility of entities’ financial statements and the financial information they provide. WHY ARE INTERNATIONAL STANDARDS IMPORTANT? High-quality international standards increase the comparability, consistency, clarity, credibility, and transparency of financial information. And, high-quality financial information, in turn, increases the stability of the global financial infrastructure. It contributes to economic growth and helps maintain fair, orderly, and efficient capital markets. It also fosters confidence in the markets of emerging nations, which encourages international investment. The International Auditing and Assurance Standards Board (IAASB) [http://www.ifac.org/auditing-assurance] is responsible for setting international standards for audit, quality control, review, other assurance, and related services. It also facilitates the convergence of international and national standards. The IAASB’s International Standards on Auditing (ISAs) are in use or are in the process of being adopted or incorporated in over Public Interest Oversight Board [http:handbook>,including: INTERNATIONALSTANDARDONQUALITYCONTROL1(ISQC1) ISQC1setsoutanaccountingfirm’sresponsibilitiesforitssystemofqualitycontrolandappliestoallauditsandreviewsoffinancialstatements,andotherassuranceandrelatedservicesengagements,performedbythefirms‘professionalaccountants. 100-999INTERNATIONALSTANDARDSONAUDITING(ISAS) ISAsaretobeappliedintheauditofhistoricalfinancialinformation. 2000-2699INTERNATIONALSTANDARDSONREVIEWENGAGEMENTS(ISRES) ISREsaretobeappliedinthereviewofhistoricalfinancialinformation. 3000-3699INTERNATIONALSTANDARDSONASSURANCEENGAGEMENTS(ISAES) ISAEsaretobeappliedinassuranceengagementsotherthanauditsorreviewsofhistoricalfinancialinformation. 4000-4699INTERNATIONALSTANDARDSONRELATEDSERVICES(ISRSS) ISRSsaretobeappliedtocompilationengagements,engagementstoapplyagreed-uponprocedurestoinformation,andotherrelatedservicesengagementsasspecifiedbytheIAASB. AllstandardsdevelopedbytheIAASBaresubjecttoarigorousdueprocess,whichincludesthoroughresearch,stakeholderconsultation,andconsiderationoftheviewsofthoseaffected.Theprocessisalsooverseenbythe