IAASB Meeting Highlights and Decisions
March 2005
Contact: Alta Prinsloo, AltaPrinsloo@ifac.org
This summary of decisions of the IAASB has been prepared for information
purposes only. Except for approval of documents for public exposure and
issuance of final Standards or Statements, decisions reported are tentative and
reflect only the current status of discussions on projects which might change
after further deliberation by the IAASB.
For more detailed information about IAASB projects, please refer to the
project summaries under current projects.
Exposure Drafts Approved
The IAASB approved the following exposure drafts for issue:

Proposed revised ISA 260, Communication with Those Charged with
Governance,

Proposed ISA 600 (Revised), The Audit of Group Financial Statements,
and

Proposed ISA 705, Modifications to the Opinion in the Independent
Auditor’s Report (previously referred to as proposed ISA 701 (Revised)),
and proposed ISA 706, Emphasis of Matter Paragraphs and Other
Matters Paragraphs in the Independent Auditor’s Report (previously
referred to as proposed ISA 702).
The due date for comments on these exposure drafts is July 31, 2005.
Auditor’s Review of Interim Financial Information
The IAASB reviewed a proposed International Standard on Review
Engagements (ISRE), Review of Interim Financial Information Performed by
the Auditor of the Entity.
Topics addressed included: the relationship between the proposed ISRE and
ISRE 2400, Engagements to Review Financial Statements; the terms “interim
financial information” and “condensed financial information; general
principles of a review of interim financial information; the terms of
engagement; obtaining an understanding of the entity; the auditor’s
communication with other auditors; management representations; inability to
complete a review; the auditor’s opinion; and documentation.
The IAASB asked that the task force consider its comments and present a
revised proposed ISRE for approval as a final ISRE at the June 2005 IAASB
meeting.
Auditor’s Report on Other Historical Financial Information and
on Summarized Financial Information
The IAASB reviewed a proposed revised ISA 800, The Independent
Auditor’s Report on Other Historical Financial Information, and a proposed
ISA 810, The Independent Auditor’s Report on Summarized Audited
Historical Financial Information.
Topics addressed with regard the proposed revised ISA 800 included: the
applicability of the ISAs to the audit of a single element, account or item of a
financial statement; the use of the terms “true and fair” or “presents fairly, in
all material respects,” in an audit opinion on a single element, account or
item of a financial statement; and matters related to the true and fair override
and the auditor’s responsibility to consider whether the other historical
information could be misleading.
Topics addressed with regard the proposed ISA 810 included: matters related
to criteria that are not publicly available; the auditor’s responsibility to
evaluate whether summarized financial information appropriately discloses
matters that are pervasive or otherwise significant; and the effect that the
audit opinion on the historical financial information has on the opinion on the
summarized financial information.
The IAASB asked that the task force consider its comments and present
revised proposed ISAs for approval as exposure drafts at the June 2005
IAASB meeting.
Related Parties
The IAASB reviewed a proposed revised ISA 550, Related Parties. Topics
addressed included: the measurement of related party transactions; how to
incorporate in the proposed revised ISA requirements that derive from or are
applications of principles in another ISA; and the structure and sequencing of
the proposed revised ISA.
The IAASB asked that the task force consider its comments and present a
revised proposed ISA for approval as an exposure draft at the June 2005
IAASB meeting.
Management Representations
The IAASB briefly considered the task force’s proposal to differentiate
between general representations relating to the financial statements as a
whole, and specific representations relating to specific financial statement
line items (i.e., internal confirmations). The IAASB asked that the task force
gather additional evidence supporting the proposal, and present a revised
issues paper at the June 2005 IAASB meeting.
Improving the Clarity of IAASB Pronouncements
The task force provided the IAASB with a brief overview of the comments
received on the Exposure Draft, Proposed Policy Statement – Clarifying
Professional Requirements in International Standards Issues by the IAASB,
and Consultation Paper, Improving the Clarity and Structure of IAASB
Standards and Related Considerations for Practice Statements.
The task force reported that there was a broad range of views expressed by
respondents in terms of how the IAASB should proceed with its work on
enhancing the clarity of its standards. The task force indicated that it intends
to pursue options that can achieve improvement on a timely basis, and to
seek a solution reflective of the balance of views of the respondents and
thereby, acceptable to most stakeholders. It also noted that any proposed
solution will seek to assist international convergence while ensuring that the
result does not weaken any of the existing standards.
An analysis of the comments received on the exposure draft and consultation
paper, and the proposed strategy to response to them, will be presented at the
June IAASB meeting.
IAASB Due Process
The IAASB considered a revised statement of due process and working
procedures based on the comments received on the Exposure Draft, Proposed
Amendments to Preface – IAASB Due Process and Working Procedures. The
IAASB expressed support for the proposed changes, which included: the
issue with each final International Standard of a separate document
explaining the IAASB’s basis of conclusions in response to comments
received on the related exposure draft; the extension of the ordinary comment
period from 90 days to 120 days; and a clear delineation between matters of
due process and matters pertaining to working procedures. The IAASB also
agreed to remove the description of IAASB’s due process and working
procedures from the body of Preface and to position it as a separate document
within the Handbook.
The IAASB asked that staff report on the views of the Public Interest
Oversight Board on the proposed revised due process and working
procedures and to present a revised document at the June IAASB meeting.
Sustainability Reporting
The IAASB noted that Royal NIVRA recently issued two exposure drafts on
sustainability assurance and use of experts in assurance engagements. The
Sustainability Experts Advisory Group, established by the IAASB Steering
Committee in 2004, is reviewing the exposure drafts, and working with
Global Reporting Initiative on criteria for sustainability.
Next Meeting
The next IAASB meeting will be held in Rome, Italy on June 13-17, 2005.