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IAASB Pronouncements
IAASB pronouncements are of several types, all of which can be downloaded without charge from IFAC's Website (registration is required):
- International Standards on Quality Control and the International Framework for Assurance Engagements apply to all types of assurance engagements.
- International Standards on Auditing (ISAs) and International Auditing Practice Statements (IAPSs) apply to audits.
- International Standards on Review Engagements apply to reviews.
- International Standards on Assurance Engagements and International Standards on Related Services apply to assurance engagements other than audits and reviews.
ISA 700 The Independent Auditor's Report
ISA 700 The Independent Auditor's Report on a Complete Set of General Purpose Financial Statements requires that:
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40. When expressing an unqualified opinion, the opinion paragraph of the auditor's report should state the auditor's opinion that the financial statements give a true and fair view or present fairly, in all material respects, in accordance with the applicable financial reporting framework (unless the auditor is required by law or regulation to use different wording
for the opinion, in which case the prescribed wording should be used).
41. When International Financial Reporting Standards or International Public Sector Accounting Standards are not used as the financial reporting framework, the reference to the financial reporting framework in the wording of the opinion should identify the jurisdiction or country of origin of the financial reporting framework.
42. The auditor's opinion states that the financial statements give a true and fair view of or present fairly, in all material respects, the information that the financial statements are designed to convey (which is determined by the financial reporting framework). For example, in the case of financial statements prepared in accordance with IFRSs, the auditor expresses an opinion that the financial statements give a true and fair view of or are presented fairly, in all material respects, the financial position of the entity as at the end of the period and the entity's financial performance and cash flows for the period then ended.
43. To advise the reader of the context in which the auditor's opinion is expressed, the auditor's opinion identifies the applicable financial reporting framework on which the financial statements are based. When the applicable financial reporting framework is not IFRSs or International Public Sector Accounting Standards (IPSASs), the auditor's opinion also identifies the jurisdiction or country of origin of the applicable financial reporting framework. The auditor identifies the applicable financial reporting framework in such terms as:
- 'in accordance with International Financial Reporting Standards' or
- 'in accordance with accounting principles generally accepted in Country X'
44. When the applicable financial reporting framework encompasses legal and regulatory requirements, the auditor identifies the applicable financial reporting framework in such terms as:
- 'in accordance with International Financial Reporting Standards and the requirements of Country X Corporations Act.'
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IAPS 1014, Reporting by Auditors on Compliance with International Financial Reporting Standards
International Auditing Practice Statement 1014 (which supplements ISA 700) addresses Reporting by Auditors on Compliance with International Financial Reporting Standards. It provides guidance for reporting when the financial statements are prepared:
- solely in accordance with International Financial Reporting Standards (IFRSs);
- in accordance with IFRSs and a national financial reporting framework; or
- in accordance with a national financial reporting framework with disclosure of the extent of compliance with IFRSs.
IAPS 1014 notes that IAS 1 requires that financial statements should not be described as complying with IFRSs unless they
comply with all the requirements of each applicable standard and each applicable interpretation of the International Financial Reporting Interpretations Committee. IAPS 1014 clarifies, therefore, that the auditor's report cannot say that financial statements comply with IFRS in any of the following circumstances.
IAPS 1014 Examples of Financial Statements that Do Not Comply with IFRS
- The financial statements indicate that they have been prepared in accordance with IFRSs but then go on to specify certain material departures. For example, a note describing the accounting polices used states that the financial statements are prepared in accordance with IFRSs except for the non-disclosure of sales for geographical segments.
- The financial statements identify specific IFRS requirements that the entity uses to prepare the financial statements, but these do not include all the requirements that are applicable to an entity fully complying with IFRSs.
- The financial statements indicate partial compliance with IFRSs without reference to specific departures. For example, a note describing the accounting policies used states that the financial statements are "based on" or "comply with the significant requirements of" or "are in compliance with the accounting requirements of" IFRSs.
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Furthermore, IAPS 1014 explains that if the auditor's report contains any qualifying or limiting language when describing the financial reporting framework, it does not meet the requirement ISA 700 that the auditor's report clearly indicate the financial reporting framework used to prepare the financial statements. For example, an opinion paragraph that indicates "the financial statements give a true and fair view and are in substantial compliance with International Financial Reporting Standards" does not meet the requirements of ISA 700.
IAPS 1014 states financial statements may be described as complying with both IFRSs and a national financial reporting framework only in certain restricted circumstances:
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Compliance with Both IFRSs and a National GAAP Framework
For financial statements to have been prepared in accordance with more than one financial reporting
framework, they must comply with each of the indicated frameworks individually. A set of financial statements that has been prepared in accordance with one financial reporting framework and that contains a note or supplementary statement reconciling the results to those that would be shown under another financial reporting framework has not been prepared in accordance with that other framework. This is because the financial statements do not include all the information in the manner required by that other framework. The financial statements must comply with both financial reporting frameworks simultaneously and without any need for reconciling statements if they are to be regarded as having been prepared in accordance with both. In practice, simultaneous compliance with both IFRSs and a national financial reporting framework is unlikely unless the country has adopted IFRSs as its national financial reporting framework or has eliminated all barriers for compliance with IFRSs. [IAPS 1014.5]
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IAASB Due Process
IAASB pronouncements are developed following a due process that includes input from the general public, IFAC member bodies and their members, and a Consultative Advisory Group that represents regulators, preparers, and users of financial statements.
IAASB projects are deliberated at meetings that are open to public observation. Click for IAASB Current Projects and Meeting Information Page.
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