Improving the Clarity of IAASB Standards
Comments from ACCA
February 2006
Executive Summary
ACCA welcomes the opportunity to comment on a proposal from the International Auditing and Assurance Standards Board (the IAASB) to improve the clarity of its International Standards on Auditing (ISAs).
This ‘Clarity project’ is important to the further widespread acceptance of ISAs around the world. It aims to facilitate legal adoption in major jurisdictions and more efficient use of ISAs on audits outside major capital markets, for example, in developing nations and for small and medium-sized enterprises.
The proposal follows a public consultation in 2004 and stakeholder dialogue to achieve a consensus over its basis. In the material exposed for comment, which includes four redrafted ISAs, the IAASB requests answers to specific questions. In this response, ACCA answers those questions and provides further comments.
ACCA gives its wholehearted support to this project. We believe that it can do much to promote international convergence in the use of ISAs, which will yield many economic benefits. We recommend acceleration of the planned timetable so that a full set of ‘clarified’ ISAs is made available for use as soon as possible.
Our main reservation about the current Clarity project is that, on the evidence of the redrafted ISAs, far too many new specific requirements are being proposed. We recommend that the proposed requirements be reconsidered on an individual basis and that they remain as requirements only if a strong case can be made for that.
We recognise that the need for an early completion is a significant factor limiting the extent of change that this project can attempt. Consequently, we welcome the announcement by the IAASB that a future project will reach consensus on the fundamental principles of auditing. That will serve, we suggest, as a sound basis for further change, such as to:
- develop fully principles-based ISAs
- prepare ISAs on a ‘think-small-first’ basis using plain English
- utilise language-independent methods to specify requirements and facilitate translation
- approach the issue and updating of ISAs holistically, rather than piecemeal.