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International Auditing and Assurance Standards Board

International Auditing and Assurance Standards Board. Convergence with International Standards on Auditing John Kellas, IAASB Chairman. CReCER Regional Conference June 14, 2007. Agenda. Why convergence matters The challenges of convergence Meeting the challenges of convergence Conclusion.

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International Auditing and Assurance Standards Board

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  1. International Auditing and Assurance Standards Board Convergence with International Standards on Auditing John Kellas, IAASB Chairman CReCER Regional Conference June 14, 2007

  2. Agenda • Why convergence matters • The challenges of convergence • Meeting the challenges of convergence • Conclusion

  3. Acceptance • Wide acceptance of international standards • “Wong” Report • 12 Key Standards for Sound Financial Systems

  4. Benefits • International investors • Applicable to listed and unlisted entities • International regulators • Auditing firms • Educators and learners

  5. Convergence vs. Adoption • Meaning of “convergence” • Adoption is preferred approach • All the advantages of convergence • All countries may contribute to standard-setting process • Fastest way to eliminate / minimize differences

  6. Challenges • Starting point • Established national standard setting process vs. new economies • Authority of standard setters • Standard setting no longer a function of most IFAC member bodies • Cultural differences

  7. Challenges (Cont.) • Philosophical differences • Rules vs. principles / objectives • The scope of the standards • Application of standards to all types and sizes of entity by all sizes of audit firm • Translation • Frequency and complexity of changes

  8. Meeting the Challenges • Working in partnership with national standard setters • National standard setters to address matters of domestic concern • Guidance on modifications to ISAs issued in July 2006 • Composition of the IAASB • Dialogue with ‘stakeholders’ • IAASB Consultative Advisory Group and others • Development of high-quality standards

  9. High-Quality Standards • High-quality standards are: • Clear • Not capable of different interpretations • Capable of translation • Enforceable • Designed to achieve a high-quality audit • ‘Jurisdictionally neutral’ • Strike a balance between principles and rules • Subject to due process • Subject to public oversight

  10. Conclusion • Adoption of international standards should be supported by • International Quality Control Standards • IFAC Code of Ethics for Professional Accountants • Implementation guidance and advice • Training and education • Monitoring and enforcement

  11. Conclusion (Cont’d) • 100+ countries use, base their standards on, ISAs • Significant announcements by • Canada, China, India and the USA • Project to adopt ISAs in the European Union • Contribution of IFAC Member Bodies in Latin America is recognized

  12. International Federation of Accountants www.ifac.org

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