In This Issue:

1. IAASB Completes First Phase of Clarity Project
2. New Standard Focuses on Accounting Estimates and Fair Values
3. Proposed ISA Addresses Communicating Deficiencies in Internal Control
4. IAASB Proposes New Standards on Service Organizations
5. Three More Clarified ISAs Issued
6. New Requirements for Audits of Group Financial Statements Issued
7. IAASB Issues Amendments to Review Engagement Standards
8. Final Effective Date for All Redrafted ISAs Announced
9. IAASB Looks to Future Strategy Following the End of Clarity Project
10. IFAC Releases Guide to Applying ISAs to Small Entity Audits
11. IFAC Launches Database of Translations of International Standards
12. US Auditing Standards Board Adopts IAASB Clarity Drafting Conventions
13. Upcoming Meetings

1. IAASB Completes First Phase of Clarity Project

The IAASB has now completed the first phase of its project to redraft its international standards to enhance their clarity and to promote adoption and implementation. In December 2007, it approved the last exposure drafts of proposed International Standards on Auditing (ISAs) redrafted following the clarity conventions. Comments are requested by March 31, 2008 on proposed ISA 501 (Redrafted), Audit Evidence Regarding Specific Financial Statement Account Balances and Disclosures, and proposed ISA 520 (Redrafted), Analytical Procedures. The exposure drafts can be viewed at http://www.ifac.org/eds.

The IAASB is on track to complete the redrafting of all ISAs as final standards by the end of 2008.

2. New Standard Focuses on Accounting Estimates and Fair Values

In February, the IAASB released new requirements on auditing accounting estimates, including fair value accounting estimates. The new standard, ISA 540 (Revised and Redrafted), Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures, addresses matters such as the auditor's evaluation of the effect of estimation uncertainty on risk assessments, management's methods for making estimates, the reasonableness of assumptions used by management, and the adequacy of disclosures. It is effective for audits of financial periods commencing on or after December 15, 2009.

In addition, the IAASB has established a task force to consider how best to approach the development of possible further fair value auditing guidance.

3. Proposed ISA Addresses Communicating Deficiencies in Internal Control

The IAASB is seeking comments by April 30, 2008 on proposed ISA 265, Communicating Deficiencies in Internal Control, which addresses the auditor's responsibility to communicate to management and those charged with governance deficiencies in internal control that the auditor has identified. The proposed standard distinguishes between significant and other deficiencies in order to establish requirements to communicate to the appropriate levels within the audited entity. It also requires that significant deficiencies be communicated in writing to those charged with governance. Comments can be emailed to EDComments@ifac.org.

4. IAASB Proposes New Standards on Service Organizations

The IAASB is also inviting comments on two proposed standards that cover third party service organizations. Proposed ISA 402 (Revised and Redrafted), Audit Considerations Relating to an Entity Using a Third Party Service Organization, deals with the auditor's responsibilities to obtain audit evidence when an entity uses one or more service organizations. Comments are requested by April 30, 2008.

Proposed International Standard on Assurance Engagements (ISAE) 3402, Assurance Reports on Controls at a Third Party Service Organization, complements the requirements in proposed ISA 402. Reports prepared in accordance with proposed ISAE 3402 will be capable of providing appropriate audit evidence under proposed ISA 402. Comments on proposed ISAE 3402 are requested by May 31, 2008.

5. Three More Clarified ISAs Issued

In December 2007, the IAASB released the following final standards redrafted in the clarity style:

• ISA 230 (Redrafted), Audit Documentation;
• ISA 260 (Revised and Redrafted), Communication with Those Charged with Governance; and
• ISA 720 (Redrafted), The Auditor's Responsibility in Relation to Other Information in Documents Containing Audited Financial Statements.

Further information on the standards is available in the press release. The standards can be downloaded free-of-charge from the International Federation of Accountants (IFAC) online bookstore.

6. New Requirements for Audits of Group Financial Statements Issued

To enhance the quality of audits of group financial statements, in October 2007 the IAASB released ISA 600 (Revised and Redrafted), Special Considerations - The Audit of Group Financial Statement (Including the Work of Component Auditors). The standard assists the group engagement partner in taking responsibility for the direction, supervision and performance of the group audit and the issue of an auditor's report that is appropriate in the circumstances. ISA 600 is effective for audits of financial periods commencing on or after December 15, 2009.

7. IAASB Issues Amendments to Review Engagement Standards

The IAASB has agreed to amend two International Standards on Review Engagements (ISREs) to clarify which standard should be applied to a specific engagement and to ensure that there is no overlap in the scopes of the standards and ISAE 3000. The amendments to ISRE 2400, Engagements to Review Financial Statements, and ISRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity, are effective immediately. They can be downloaded from the IFAC bookstore (http://www.ifac.org/store).

8. Final Effective Date for Redrafted ISAs Announced

The IAASB has announced that the final effective date for all redrafted ISAs will be for audits of financial statements for periods beginning on or after December 15, 2009. The IAASB believes the effective date will enable standard setters, regulators and auditors to plan for the adoption and implementation of the standards. Further information on the effective date is available in the IAASB communique.

9. IAASB Looks to Future Strategy Following the End of Clarity Project

In October 2007, the IAASB released a consultation paper on its proposed future technical strategy for the period 2009-2011. The paper was part of an extensive IAASB consultation process on its future work program following the completion of the clarity project. While the IAASB intends to continue to make auditing standards its first priority, its proposed strategy would also focus on contributing to the effective operation of the world's capital markets, assisting with the implementation of standards, and addressing the needs of small and medium entities (SMEs). The consultation paper and comment letters received can be viewed at http://www.ifac.org/Guidance/EXD-Details.php?EDID=0096. The IAASB plans to approve its strategy early in 2008.

10. IFAC Releases Guide to Applying ISAs to Small Entity Audits

IFAC has released a new implementation guide to assist practitioners, and in particular small and medium practices, in applying ISAs to the audit of SMEs. The publication, Guide to Using ISAs in the Audit of Small- and Medium-sized Entities, provides a detailed analysis of all ISAs issued as of December 31, 2006 and their requirements in the context of an SME audit. The guide is available free-of-charge from the IFAC bookstore (http://www.ifac.org/store).

11. IFAC Launches Database of Translations of International Standards

IFAC has launched a database of third-party translations of IAASB pronouncements and other standards issued by IFAC's standard-setting boards. The database features information on the languages available, publication titles, names of translating organizations and, where available, lists of translated key terms. In addition, IFAC has released two updated policy statements to facilitate the translation and reproduction of its publications. For more information, visit: http://www.ifac.org/translations.

12. US Auditing Standards Board Adopts IAASB Clarity Drafting Conventions

The United States Auditing Standards Board (ASB) has undertaken a project to improve the clarity of its Statements on Auditing Standards (SASs) and has decided to adopt the IAASB's clarity drafting conventions. The goal of the project is to redraft existing SASs using a common set of conventions that will promote their consistent application and will support the harmonization of SASs with ISAs. For more information, visit the ASB home page.

13. Upcoming Meetings

The next meeting of the IAASB will be held in New York City on March 10-14, 2008. The following meeting will be held in Athens, Greece on June 16-20, 2008. For more information and to register to attend an IAASB meeting as a public observer, visit: http://www.ifac.org/IAASB/Meetings.php.

Meetings of the IAASB Consultative Advisory Group (CAG) are also open to public observers. The CAG's next meeting will be held in Basel, Switzerland on March 3-4, 2008, and the following meeting will be held in Toronto, Canada on September 4-5, 2008. For more information about the CAG, visit: http://www.ifac.org/IAASB/ConsultativeAdvisoryGroup.php.

For more information about any of the items mentioned above or other information about the IAASB, please contact: pr@ifac.org.

About the IAASB and IFAC

The objective of the IAASB, and independent standard-setting board under the auspices of IFAC, is to serve the public interest by setting high quality auditing and assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession. The Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes its due process and working procedures.

IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international auditing and assurance standards through the IAASB, IFAC, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.