International Auditing Standards
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(IAASB) International Auditing and Assurance Standards Board works like an independent standard setting body under the (IFAC) International Federation of Accountants. It works to establish best quality auditing, assurance, quality control and related services and to improve the uniformity of practice, by professionals across the world, thereby improving confidence in publicc.
The IAASB, till 2002, was known as the International Auditing Practices Committee (IAPC). (SASs) Statements on Auditing Standards are issued by the Auditing Standards Board (ASB), the senior technical body of the AICPA.
Compliance with Standards of the AICPA Rule 202, Code of Professional Conduct requires an AICPA member who performs an audit of a non-issuer to comply with standards framed by the ASB. In 2007, project was initiated by ASB, to clarify its standards to make them easily understandable, comfortable to read and apply and also for convergence.
As such, the ASB developed clarity drafting traditions and has revised all the SASs in accordance with those traditions, by using the corresponding (ISAs) International Standards on Auditing. Almost every clarified SAS varies from its corresponding ISA, but only where the ASB strongly believes in compelling reasons exist for the differences, those were not altered. In order to qualify and meet all ISA requirements are also requirements of GAAS of USA However, for certain issues, GAAS contain additional requirements are those specifically related to the United States of America or have been retained from earlier SASs.
Any member of AICPA practicing in the United States of America may take up auditing the financial statements of a non-user as per the ISAs. In such, circumstances the auditor’s report states that the audit was conducted in line with the ISAs, the U.S. auditor should comply with both the ISAs and, as required by the AICPA and GAAS. An engagement of this nature is generally conducted audits in accordance both GAAS and also additional procedures required by ISAs.
In this document, given a brief idea about how each ISA differs from the comparable U.S. standard. While performing an audit in accordance with the ISAs, the auditor should comply with IFAC’s Code of Ethics. However, to fully understand how the nature, timing, and extent of the procedures of the ISA might affect in an engagement in accordance with GAAS, the auditor also should consider the ISAs in their totality with the standards and the related guidance included in the ISAs.
For detailed comparison of the ISAs included Professional Standards, the 2010 edition of the Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements, to the AICPA’s. References to GAAS are made to the relevant AU-C sections. This analysis describes the differences in terms of differences in language, requirements in the ISAs not in GAAS, requirements in GAAS but not in the ISAs, Differences between requirements and the placement of certain requirements with in GAAS.
While converging the ISAs, the ASB has made several changes to the language of the ISAs throughout the SASs. Such changes were made to use terms applicable in the United States and to make them easier to read and apply. However, the ASB believes that such changes do not create differences between the application of the ISAs and the application of GAAS.
The following are major heads of auditing standards in the US:
200- 299 General Principles & responsibilities
300-499 Risk assessment and response to Addressed tasks
500- 599 Audit Evidence
600- 699 using the work of others
700- 799 Audit conclusions & reporting
800- 899 specialized areas
Britain (UK)
The primary responsibility of the FRC is encouraging extremely high quality of financial reporting and corporate governance with a fundamental objective of fostering investment. “UK Corporate Governance and Stewardship Codes were set as well as UK standards for accounting, auditing and actuarial work.”
FRC represents the interests of UK in the global domain of standard-setting. It also supervises and takes necessary action for ensuring the quality of financial reporting and auditing of corporate organizations. It operates as an autonomous disciplinary establishment for accountants and auditors, and ensures that the regulatory activities of accountancy and auditing are carried out in complete conformity to the set standards.
Scope of this ISA (UK and Ireland)
This International Standard on Auditing (ISA) (UK and Ireland) develops standards and provides guidance in the form and content of the auditor’s report issued as a result of an audit conducted on financial statements by an independent auditor.
This ISA (UK and Ireland) is written to advice on both “Compliance frame work” and ‘‘true and fair” frameworks.
A ‘‘compliance framework’’ requires compliance with the framework and does not contain the acknowledgements in (a) or (b) below.
A ‘‘true and fair framework’’ requires compliance with the framework, but which acknowledges that to achieve a true and fair view:
(a) Additional disclosures may be necessary to those specifically required by the framework and
(b) It may be necessary to depart from a requirement of the framework
Opinion on the Financial Statements
The paragraph of the auditor’s report opinion, shall clearly give the auditor’s opinion as per the financial reporting framework used to prepare the financial statements, including applicable law.
While, expressing an unqualified opinion on financial statements prepared as per the framework “true and fair”, the opening paragraph shall clearly cite that the financial statements give a true and fair view.
But, it is not enough for the auditor to conclude that the financial statements give a true and fair view on the basis that the financial statements were prepared as per accounting standards and any other applicable legal requirements.
Opinion in Respect of an Additional Financial Reporting Framework
At the time of engagement of an auditor to issue an opinion on the financial statements, compliance with an additional financial reporting framework the second opinion should be clearly separated from the first opinion, by use of an appropriate heading.
Kuwait
IAASB (The International Auditing and Assurance Standards Board) is an independent standard-framing body that serves the public interest by developing high-quality international standards for auditing, assurance, and other standards, and by facilitation of the convergence of international and national auditing and assurance standards. While, performing the same, the IAASB improves the quality and consistency of practice across the world and builds the confidence in pubic on the global auditing and assurance profession.
Reviewing and Auditing the Interim as well as the consolidated financial information is one of the assurances, services given to the auditors who work independently.
The aim of issuing assured the financial statements is to empower the end-users with extremely transparent, clear and guaranteed financial information.
According to the Law No. 25 of 2012 as amended by Law no 97 of 2013 in Kuwait, all businesses are required to prepare consolidated financial statements and broad income statements along with the necessary notes at the end of every financial year. These statements should again be in complete conformity to the IAS standards, which were modified to be IFRS according to IASB.
Reference of Independent auditor in the audit of financial statements.
The IFAC (International Federation of Accountants) emanating from the IASB, requires auditors to follow IAS in auditing the annual financial statements or reviewing the condensed interim financial information. The independent auditor is also committed to forming an opinion on the company’s compliance with applying.
The IFRS; The Companies Law in Kuwait, The ministerial resolutions and instructions in Kuwait and the Resolutions and Instructions issued by the regulatory authorities in Kuwait.
References
Financial Reporting Council. (2012, June 6). Financial Reporting Council. Retrieved from Financial Reporting Council: https://www.frc.org.uk/
IAASB, IFAC. (2013). Handbook of International Quality Control, Auditing, review, other assurances and related services and pronouncements. New York: IFAC.
IFAC. (2014). Kuwait. Retrieved from IFAC: http://www.ifac.org/content/kuwait
International Federation of Accountants. (2014). IAASB. Retrieved from International Federation of Accountants: http://www.ifac.org/auditing-assurance
International Standards on Auditing. (2013). International Standards on Auditing (UK and Ireland) 700. London: ISA.
