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IAASB Pronouncements
IAASB pronouncements are of several types, all of which can be downloaded without charge from IFAC's Website (registration is required):
- International Standards on Quality Control and the International Framework for Assurance Engagements apply to all types of assurance engagements.
- International Standards on Auditing (ISAs) and International Auditing Practice Statements (IAPSs) apply to audits.
- International Standards on Review Engagements apply to reviews.
- International Standards on Assurance Engagements and International Standards on Related Services apply to assurance engagements other than audits and reviews.
ISA 700, The Auditor's Report on Financial Statements
ISA 700, The Auditor's Report on Financial Statements, requires that:
| The opinion paragraph of the auditor’s report should clearly indicate the financial reporting framework used to prepare the financial statements (including identifying the country of origin of the financial reporting framework when the framework used is not International Accounting Standards) and state the auditor’s opinion as to whether the financial statements give a true and fair view (or are presented fairly, in all material respects) in accordance with that financial reporting framework and, where appropriate, whether the financial statements comply with statutory requirements. |
IAPS 1014, Reporting by Auditors on Compliance with International Financial Reporting Standards
International Auditing Practice Statement 1014 (which supplements ISA 700) addresses Reporting by Auditors on Compliance with International Financial Reporting Standards. It provides guidance for reporting when the financial statements are prepared:
- solely in accordance with International Financial Reporting Standards (IFRSs);
- in accordance with IFRSs and a national financial reporting framework; or
- in accordance with a national financial reporting framework with disclosure of the extent of compliance with IFRSs.
IAPS 1014 notes that IAS 1 requires that financial statements should not be described as complying with IFRSs unless they comply with all the requirements of each applicable standard and each applicable interpretation of the International Financial Reporting Interpretations Committee. IAPS 1014 clarifies, therefore, that the auditor's report cannot say that financial statements comply with IFRS in any of the following circumstances.
IAPS 1014 Examples of Financial Statements that Do Not Comply with IFRS
- The financial statements indicate that they have been prepared in accordance with IFRSs but then go on to specify certain material departures. For example, a note describing the accounting polices used states that the financial statements are prepared in accordance with IFRSs except for the non-disclosure of sales for geographical segments.
- The financial statements identify specific IFRS requirements that the entity uses to prepare the financial statements, but these do not include all the requirements that are applicable to an entity fully complying with IFRSs.
- The financial statements indicate partial compliance with IFRSs without reference to specific departures. For example, a note describing the accounting policies used states that the financial statements are "based on" or "comply with the significant requirements of" or "are in compliance with the accounting requirements of" IFRSs.
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Furthermore, IAPS 1014 explains that if the auditor's report contains any qualifying or limiting language when describing the financial reporting framework, it does not meet the requirement ISA 700 that the auditor's report clearly indicate the financial reporting framework used to prepare the financial statements. For example, an opinion paragraph that indicates "the financial statements give a true and fair view and are in substantial compliance with International Financial Reporting Standards" does not meet the requirements of ISA 700. IAPS 1014 states financial statements may be described as complying with both IFRSs and a national financial reporting framework only in certain restricted circumstances:
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Compliance with Both IFRSs and a National GAAP FrameworkFor financial statements to have been prepared in accordance with more than one financial reporting framework, they must comply with each of the indicated frameworks individually. A set of financial statements that has been prepared in accordance with one financial reporting framework and that contains a note or supplementary statement reconciling the results to those that would be shown under another financial reporting framework has not been prepared in accordance with that other framework. This is because the financial statements do not include all the information in the manner required by that other framework. The financial statements must comply with both financial reporting frameworks simultaneously and without any need for reconciling statements if they are to be regarded as having been prepared in accordance with both. In practice, simultaneous compliance with both IFRSs and a national financial reporting framework is unlikely unless the country has adopted IFRSs as its national financial reporting framework or has eliminated all barriers for compliance with IFRSs. [IAPS 1014.5] |
IAASB Due Process
IAASB pronouncements are developed following a due process that includes input from the general public, IFAC member bodies and their members, and a Consultative Advisory Group that represents regulators, preparers, and users of financial statements. IAASB projects are deliberated at meetings that are open to public observation. Click for IAASB Current Projects and Meeting Information Page. |
