International Auditing

Question 1

Who created the International Standards on Auditing (ISA)?

Answer 1

The International Auditing and Assurance Standards Board (IAASB)

Member of the International Federation of Accountants (IFAC)

Question 2

To what types of companies do ISA apply?

Answer 2

Apply to all types of audits - listed companies, non-listed companies and government entities

The pronouncements apply to audit, review, other assurance, quality control and related services engagements that are conducted in accordance with international standards

the pronouncements do not override auditing standards of its members

Question 3

How do IAASB audit standards compare to US audit standards?

Answer 3

No Internal Control audits

No Referencing another Audit Firm

Going concern time horizon at least 12 months

Less detailed documentation

Confirmations of AR not presumptively required

Required: location of auditor’s office that performed the audit

Report may indicate “statements present fairly or give a true and fair view” (unmodified opinion)

Required: written representation from mgt of its assessment of fraud risk

letter of audit inquiry to lawyer - only when assessment of RMM

EOM after opinion

subsequent event - report date must be modified

audit report includes section titles for auditor responsibility, management responsibility and opinion

Question 4

What are International Ethical Standards? To whom do they apply?

Answer 4

Standards set by International Ethics Standards Board for Accountants (IESBA)

Code of Ethics for Professional Accountants - Similar to AICPA Code of Professional Conduct

Applies to all accounts, accountants in public practice, accountants in private practice

Question 5

What is the framework for all accountants under the International Ethical Standards?

Answer 5

Integrity
Objectivity
Competence and Due Care
maintain Confidentiality
act Professionally

Question 6

What is the approach to determine independence if no definitive prohibition exists?

Answer 6

• identify threats
• evaluate the significance
• apply the safeguards to reduce or eliminate to an acceptable level
• if unable, consider not accepting or continuing with engagement
• document considerations and conclusions

Question 7

what are the threats and safeguards to independence?

Answer 7

threats:

• financial interest in client
• certain business relationships
• serving as director, officer or employee of client
• performing certain non-assurance services

safeguards:

• those created by the profession, legislation, regulation
• those implemented by the firm