International Federation of Accountants ADDRESSING THE NEEDS OF SMP IN THE DEVELOPMENT OF IAASB PRONOUNCEMENTS - PowerPoint PPT Presentation

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International Federation of Accountants ADDRESSING THE NEEDS OF SMP IN THE DEVELOPMENT OF IAASB PRONOUNCEMENTS PowerPoint Presentation
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International Federation of Accountants ADDRESSING THE NEEDS OF SMP IN THE DEVELOPMENT OF IAASB PRONOUNCEMENTS

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  1. International Federation of Accountants ADDRESSING THE NEEDS OF SMP IN THE DEVELOPMENT OF IAASB PRONOUNCEMENTS Jan Tyl, IAASB Technical Manager IFAC SMP/SME and Developing Nations Consultative Conference Prague, March 10-11, 2005

  2. Defining the Context Int’l. Fed. of Accountants • Small and medium-sized practice (SMP) definition - IFAC • Small and medium-sized entity (SME) definitions • the European Union • IFC • Czech Republic • USA • IAASB

  3. SMP Permanent Task Force (SMP PTF) Int’l. Fed. of Accountants • SMP/SME in IFAC Strategic Plan • SMP Permanent Task Force • To directly work with standard-setters • To monitor IFAC committees work • To facilitate communication

  4. SMP Permanent Task Force (SMP PTF) Int’l. Fed. of Accountants • IAASB liaison with SMP PTF • Composed of 15 members • Rapid Response Teams (up to 4 members) • Comments on standards and guidance – 10 since January 2004

  5. SMP Permanent Task Force (SMP PTF) Int’l. Fed. of Accountants • Comments on proposed revised ISA 260 result in changes to the exposure draft • Proposed revised ISA 701 includes situations relevant for SMEs • Practice aids development

  6. Applicability of ISAs to SMEs and SMPs Int’l. Fed. of Accountants • The Wong Report • Length and complexity of ISAs • Cost of compliance • Inconsistent application of standards • Lack of SMP/SME involvement in standard-setting • Focus on large entities

  7. Developing Standards Applicable to Audits of All Entities Int’l. Fed. of Accountants • Clarity project • Requirements and presumptive requirements (shall and should) • Bold type lettering and present tense • Comments currently considered

  8. Developing Standards Applicable to Audits of All Entities Int’l. Fed. of Accountants • International Auditing Practice Statement 1005 (IAPS) • Introduced in 1999, revised in 2003 • Not designed to substitute ISAs • ISA 240 and IAPS 1005 • Commentaries and considerations of SMP/SME issues

  9. Int’l. Fed. of Accountants Developing Standards Applicable to Audits of All Entities • Is IAASB meeting its objective of one set of standards applicable to all entities? • Difficult to reconcile circumstances of large and small entities • Significance of the public interest

  10. Int’l. Fed. of Accountants Developing Standards Applicable to Audits of All Entities • “An audit is an audit” • “Think-small-first” standard-setting • Consultative Advisory Group • SMP/SME participation on IAASB Task Forces • 2 IAASB members from SMPs • SMP participation impediments

  11. Int’l. Fed. of Accountants Is Audit the Only Alternative for SMP/SMEs? • Do SME owners and SME accounts users need an audit? • Is audit a “stamp purchase?”

  12. Int’l. Fed. of Accountants Is Audit the Only Alternative for SMP/SMEs? • What could replace audit? • Two levels of assurance • Canadian experience • British experience • IAASB study • Moderate assurance – ISRE 2400

  13. Questions to Participants Int’l. Fed. of Accountants • What other steps should IAASB take to address the issues raised in the Wong Report? • Would a different level of assurance serve the public interest? • Are there other relevant questions?

  14. International Federation of Accountants