INTERNATIONAL FEDERATION OF ACCOUNTANTS

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

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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

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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

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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

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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

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Conclusion (Contd)

• 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

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International Federation of Accountants www.ifac.o
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