Enhancing the clarity of international standards

As part of its comprehensive program to improve the clarity of international standards, the International Auditing and Assurance Standards Board of the International Federation of Accountants has issued exposure drafts of four proposed standards in a new drafting style. It has also issued an exposure draft of proposed amendments to the Preface to the international standards on quality control, auditing, assurance and related services and an explanatory memorandum to accompany the EDs. The release of these documents marks the beginning of the IAASB’s ambitious 18-month program to redraft standards and to develop new ones using the new style.

The IAASB developed its new drafting style based on responses to its 2004 Proposed policy statement and consultation paper on clarity. The proposals were discussed at a forum of interested parties in July 2005 and refined as a result. Key elements of the new drafting style include: basing the standards on objectives, as opposed to procedural considerations; use of the word “shall” to identify requirements that the professional accountant is expected to follow in the vast majority of engagements; eliminating the present tense to describe actions by the professional accountant, which some had regarded as ambiguous in terms of obligation; and structural improvements to enhance the overall readability and understandability of the standards.

The following four proposed standards have been re-drafted in the new style:

International Standard on Auditing (ISA) 240 (redrafted), “The auditor’s responsibility to consider fraud in an audit of financial statements.”
ISA 300 (Redrafted), “Planning an audit of financial statements.”
ISA 315 (Redrafted), “Understanding the entity and its environment and assessing the risks of material misstatement.”
ISA 330 (Redrafted), “The auditor’s procedures in response to assessed risks.”

How to Comment

Comments on the exposure drafts are requested by February 28, 2006. The EDs may be viewed by going to http://www.ifac.org/EDs.

Comments may be submitted by email to EDComments@ifac.org.