HANDBOOK OF INTERNATIONAL AUDITING ASSURACE AND ETHICS PRON. 2004 IFAC Księgarnia

CHANGES OF SUBSTANCE FROM THE 2003 EDITION OF THE HANDBOOK AND RECENT DEVELOPMENTS

References

This handbook contains references to the International Auditing Practices Committee (IAPC) of the International Federation of Accountants (IFAC). As of April 1,2002 the International Auditing and Assurance Standards Board (IAASB) of IFAC replaced the IAPC.

This handbook also contains references to the International Accounting Standards Committee (IASC). As of April 1,2002 the International Financial Reporting Standards (IFRSs) (previously referred to as International Accounting Standards (LASs)) are issued by the International Accounting Standards Board (IASB). References to IASs and IFRSs are to the IASs and IFRSs in effect at the date of preparing a pronouncement. Accordingly, readers are cautioned that, where a revised IAS or IFRS has been issued subsequently, reference should be made to the most recent IAS or IFRS.

Pronouncements Issued by the IAASB Structure

The structure of the pronouncements was amended to provide for the following Engagement Standards issued by the IAASB:

• International Standards on Auditing (ISAs 100-999)

• International Standards on Review Engagements (ISREs 2000-2999)

• International Standards on Assurance Engagements (ISAEs 3000-3999)

• International Standards on Related Services (ISRSs 4000-4999). The following ISAs were renumbered accordingly:

• ISAE 100, "Assurance Engagements" was renumbered as ISAE 3000.

• ISA 810, "The Examination of Prospective Financial Information" was renumbered as ISAE 3400.

• ISA 910, "Engagements to Review Financial Statements" was renumbered as ISRE 2400.

• ISA 920, "Engagement to Perform Agreed-upon Procedures Regarding Financial Information" was renumbered as ISRS 4400.

• ISA 930, "Engagement to Compile Financial Information" was renumbered as ISRS 4410.

For further clarification in this regard reference should be made to the Structure of Pronouncements Issued by the IAASB in the Auditing and Assurance Section of this handbook.

Additions

The following additions have been made in this edition of the handbook:

• "International Auditing and Assurance Standards Board-Interim Terms of Reference," which replaced the proposed terms of reference that was published in the 2003 edition of the handbook.

• "Preface to the International Standards on Quality Control, Auditing, Assurance and Related Services," which replaced the proposed Preface that was published in the 2003 edition of the handbook.

• New "International Framework for Assurance Engagements." The Framework provides a frame of reference for assurance engagements where the assurance report is dated on or after January 1, 2005. Earlier application of the Framework is permissible.

• New Audit Risk Standards comprising:

ISA 315, "Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement;"

ISA 330, "The Auditor's Procedures in Response to Assessed Risks;" ° Revised ISA 500, "Audit Evidence;" and

Amendments to ISA 200, "Objective and General Principles Governing an Audit of Financial Statements." The amendments are reflected in the appendix of the extant ISA 200.

ISAs 315,330,500 (Revised) and the amendments to ISA 200 are effective for audits of financial statements for periods beginning on or after December 15, 2004. ISA 310, "Knowledge of the Business," ISA 400, "Risk Assessments and Internal Control," ISA 401, "Auditing in a Computer Information Systems Environment," extant ISA 500, "Audit Evidence" and International Auditing Practice Statement (IAPS) 1008, "Risk Assessments and Internal Control-CIS Characteristics and Considerations" will be withdrawn when the Audit Risk Standards become effective.

The Audit Risk Standards also gave rise to conforming changes to other ISAs. The conforming changes, which are effective for audits of financial statements for periods beginning on or after December 15,2004, are available from the websife of the IAASB at http://www.iaasb.org.

Revised International Standard on Assurance Engagements (ISAE) 3000, "Assurance Engagements Other Than Audits or Reviews of Historical Financial

Information." ISAE 3000 (Revised) is effective for assurance engagements where the assurance report is dated on or after January 1, 2005. Earlier application is permissible. ISAE 3000 (previously ISA 100), "Assurance Engagements" and ISA 120, "Framework of International Standards on Auditing" will be withdrawn when ISAE 3000 (Revised) becomes effective.

Revised IAPS 1005, "The Special Considerations in the Audit of Small Entities." The revised IAPS 1005 covers ISAs issued until March 2003. For ISAs issued subsequent to March 2003, whenever necessary, small entity audit considerations are included in the body of those ISAs. Guidance contained in IAPS 1005 will be withdrawn when revisions to related ISAs become effective. Accordingly, readers are cautioned that, in addition to the guidance in IAPS 1005, reference should be made to the small entity audit considerations included in ISAs issued subsequent to March 2003.

New IAPS 1014, "Reporting by Auditors on Compliance With International Financial Reporting Standards" was approved in March 2003 for publication on June 1,2003.

Recent Exposure Drafts

The IAASB has issued exposure drafts proposing revisions to the following ISAs:

ISA 220, "Quality Control for Audit Work." ISA 220 (Revised) will deal with quality control matters specific to engagements to audit financial statements. Firm-wide quality control matters, covering audit, assurance and related services, will be dealt with in a new International Standard on Quality Control (ISQC). In addition, International Professional Practice Statement (IPPS) 1, "Assuring the Quality of Professional Services" is being revised by the IFAC Board. IPPS 1 in its revised form will be renamed Statement of Membership Obligations (SMO) 1.

ISA 240, "The Auditor's Responsibility to Consider Fraud and Error in an Audit of Financial Statements."

ISA 300, "Planning."

ISA 600, "Using the Work of Another Auditor." In addition, a proposed new LAPS on "The Audit of Group Financial Statements" will provide practical assistance in the application of ISAs to the audit of group financial statements.

ISA 700, "The Auditor's Report on Financial Statements."

For additional information on recent developments and to obtain final pronouncements issued subsequent to January 1,2004 or outstanding exposure drafts visit the IAASB's website at http://www.iaasb.org.

Pronouncements Issued by the IFAC Ethics Committee

Additions

During 2003, the IFAC Ethics Committee issued an interpretation of Section 8.151 of the Code of Ethics for Professional Accountants (the Code), outlining relevant transition arrangements relating to the provision ofnon assurance services to assurance clients and lead engagement partner rotation for audit clients that are listed entities

Recent Exposure Drafts

The IFAC Ethics Committee has issued exposure drafts proposing revisions to the Code as follows:

Revisions to Parts A, B (except Section 8) and C to apply the principles based approach, used successfully in the revision of Section 8, to the remainder of the Code, and to elevate the authority of the Code by proposing that no member body or firm is allowed to apply less stringent standards than those in the Code. (Where member bodies or firms are prohibited from complying with certain parts of the Code by law or regulation, they should comply with all other parts of the Code.)

A revision to Part B, paragraph 8.151, to clarify that an individual who has completed a pre-defined period, normally seven years, in the role of engagement partner for an audit of a listed entity should not participate in the assurance engagement until a further period of time, normally two years, has elapsed.

For additional information on recent developments and to obtain final pronouncements issued subsequent to January 1, 2004 or outstanding exposure drafts visit the IFAC Ethics Committee's page on the IFAC website at http://www.ifac.org/.

INTERNATIONAL FEDERATION OF ACCOUNTANTS

The Organization

The International Federation of Accountants (IFAC) is the worldwide organization for the accountancy profession. Founded in 1977, its mission is to serve the public interest, strengthen the global accountancy profession and contribute to the development of strong international economies by establishing and promoting adherence to high-quality professional standards, furthering the international convergence of such standards, and speaking out on public interest issues where the profession's expertise is most relevant.

IFAC's governing bodies, staff and volunteers are committed to the values of integrity, transparency and expertise. IFAC also seeks to reinforce professional accountants adherence to these values, which are reflected in the IFAC Code of Ethics for Professional Accountants.

Primary Activities Serving the Public Interest

IFAC strives to serve the public interest in the following ways:

Developing, promoting and maintaining global professional standards and a Code of Ethics of a consistently high quality;

Actively encouraging convergence of professional standards, particularly standards on auditing, assurance, ethics, education and financial reporting;

Seeking continuous improvements in the quality of auditing and financial management; and

Promoting compliance with membership obligations. •

Contributing to the Efficiency of the Global Economy

IFAC contributes to the efficient functioning of the international economy by:

Improving confidence in the quality and reliability of financial reporting;

Encouraging the provision of high quality performance information (financial and non-financial) within organizations; and

Promoting the provision of high quality services by all members of the worldwide accountancy profession.

Providing Leadership and Spokesmanship

IFAC is the primary spokesperson for the international profession and speaks out on a wide range of public policy issues, especially those where the profession's expertise is most relevant, as well as on regulatory issues related to auditing and financial reporting.

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