november 2008 examination - The Malaysian Institute Of Certified ...

Related PartiesThe involvement of related parties in major corporatescandals encouraged the IAASB to revise its current auditingstandard on the subject. The revised Related Partiesstandard clarifies the meaning of "related party" for purposesof an audit. It also makes clear the auditor's responsibilityto obtain sufficient evidence about the required accountingand disclosure of related party relationships andtransactions and to understand how such relationships andtransactions affect the view given by the financial statements."The standard will strengthen current auditing practicein this area by emphasising the need for the auditor tounderstand related party relationships and transactions inorder to identify the risks of material misstatement to whichthese may give rise, and directing the auditor to focus work efforton the assessed risks of material misstatement, includingthose due to fraud," explains John Kellas, IAASB Chairman."The revised standard clarifies the auditor's responsibilitiesin those cases where the financial reporting frameworkestablishes minimal or no related party requirements. Inaddition, it provides enhanced guidance to assist the auditorin understanding and responding to the risks of materialmisstatement that may arise in relation to related partieswith dominant influence," emphasises Kellas.Clarity Redrafted ISAsIn addition to ISA 550 (Revised and Redrafted), the IAASBhas also released the following clarity redrafted ISAs:• ISA 250 (Redrafted) - Consideration of Laws andRegulations in an Audit of Financial Statements;• ISA 510 (Redrafted) - Initial Audit Engagements-Opening Balances; and• ISA 570 (Redrafted) - Going Concern.They form part of the IAASB's ambitious 18-monthprogram to redraft existing standards following the claritydrafting conventions. To date, the IAASB has released 15final clarity redrafted ISAs. The IAASB is on track to finalizeits complete set of clarified ISAs by the end of this year.The complete set of clarified ISAs, including newlyrevised standards such as ISA 550 (Revised and Redrafted),will be effective for audits of financial statements forperiods beginning on or after December 15, 2009.The ISAs can be downloaded free-of-charge from theIFAC online bookstore at http://www.ifac.org/store.(Source: www.ifac.org)IFAC’s International Auditing andAssurance Standards Board IssuesStrategy and Work Program for 2009-2011The International Auditing and Assurance StandardsBoard (IAASB), an independent standard-setting boardunder the auspices of the IFAC, on July 14, 2008 releasedits Strategy and Work Program, 2009-2011. The three-yearstrategy includes an emphasis on the development ofstandards that contribute to the effective operation of theworld's capital markets and that address the needs of smallandmedium-sized entities and small and mediumpractices.The Strategy and Work Program, issued followingconsideration and approval of its completeness from apublic interest perspective by the Public Interest OversightBoard (PIOB)*, is consistent with the IAASB's overallobjectives. ** It builds on the strong base of standardsdeveloped by the IAASB to date and focuses on three areas:• The development of standards;• The facilitation and monitoring of adoption of thosestandards; and• Responding to concerns about the implementation ofthe standards by activities designed to improve theconsistency with which they are applied in practice."The IAASB's vision is that the high quality standardson assurance, related services and, in particular,International Standards on Auditing that we develop in thepublic interest are adopted and applied internationally.The strategy and work program are consistent with thislonger term vision," explains John Kellas, IAASB Chairman.The Strategy and Work Program responds to significantdevelopments in the environment in which audit and otherassurance services are performed, and in which standardsfor such services are set. It also highlights the IAASB role inworking toward global acceptance of and convergence withits standards and in establishing and maintaining relevantpartnerships. It is underpinned by the IAASB's communicationsinitiatives to keep stakeholders informed of its activitiesand to promote adoption and implementation of itsstandards.The Strategy and Work Program reflects the outcome ofan extensive consultation program to obtain the widestpossible input into determining the IAASB's priorities overthe next three years. A summary of the IAASB's conclusionswith regard to significant matters raised during theseconsultations is presented in the Basis for Conclusions:IAASB Strategy and Work Program, 2009-2011."I am grateful to the many people and organizationsthat contributed to our strategy review consultations. Ihope that the direction of our work will be seen asresponding to the representations made to us, and to thepublic interest, which must be our overriding concern. Ofcourse, events and circumstances may require us to amendour program, and for this reason it will be kept underconstant review," notes Kellas.The Strategy and Work Program, 2009-2011 can bedownloaded free-of-charge from the IFAC online bookstore(http://www.ifac.org/store). To access the related Basis forConclusions and other information on the IAASB's work,www.micpa.com.myAugust 2008 | The Malaysian Accountant |33