International Auditing and Assurance Standards Board ISA Implementation

International Auditing and Assurance Standards Board ISA Implementation Monitoring Project Update Jon Grant, IAASB Task Force Chairman IAASB Board Meeting 18 March 2010 1

Project Outline The ISA Implementation Monitoring Project in Outline A two-phase approach: 1. 2. Monitoring experiences of implementation of the clarified ISAs by countries and firms 2009 - 2011 Post-implementation review of the clarified ISAs 2012/13? 2

ISA Implementation Timing – Countries Financial periods ending. . 31 December 2009 2010 2011 2012 India ◄New Zealand Japan? Australia Brazil S. Africa Canada USA (nonpublic entities) Netherlands UK China?

Phase 1 Survey of Countries Summary of Country Responses Surveyed 11 countries Responses received from countries (Australia, Brazil, Canada, China, India, the Netherlands, New Zealand, South Africa, United Kingdom, United States (non-public entities) Adoption of the Clarity ISAs • Most are adopting all the ISAs (exception: UK) • One country is basing national auditing standards on clarified ISAs (AICPA auditing standards for non-public entities) • All are adopting ISQC 1 (exception Netherlands – but has adopted pre-clarity ISQC 1) • Most are using the same structure • Most countries title national standards without reference to the ISAs (exceptions: UK and New Zealand) Translation 4 of the countries have translated the ISAs into national language(s). 1 country described some difficulty. General Issue More background information is needed on all of the ISAs, and on changes made in the Clarity ISAs and reasons for changes 4

Phase 1 Survey of Country Responses Summary of Country Responses ISA requirements Two countries have adopted without changing the requirements Most have introduced additions to the requirements. Some have deleted requirements Question: Are modifications of such an extent or nature that the resulting national standards do not reflect the ISAs? (Guidance set out in IAASB Policy Paper issued July 2006) ISA application guidance Most countries have developed additional application guidance, or have amended the application guidance to reflect country needs Guidance for SMEs • “Considerations Specific to Small Entities” not viewed as adequate • IFAC SMPC ISA Guide – shortcomings? 5

Phase 1 Survey of Firm Responses Summary of Firm Responses Structure and • No challenges posed by the structure of the ISAs content of the • Objectives are incorporated into the firm methodologies in Clarity ISAs varying ways (e. g. in some cases not separately identifiable) • Objectives and application material are viewed as useful • “Considerations for Small Entities” is not useful or sufficient 6

Phase 1 Areas of Focus Information gathered so far… Areas of Focus • Implementation difficulties: individual ISAs – ISA 600 Group Audits – ISA 320 Materiality • Extent of modifications – Implications for compliance – Status and relevance of current IAASB Policy Guidance. • Implementation by SMEs – Evidence gathering during 2010 -2012 through SMPC & IAASB NSS ( leading into Phase 2 - 2012) 7

Timetable Review timetable in context of IAASB’s three- year planning cycle Proposed Full Review ISA's apply 2009 Consultation on 2009 -2011 Strategy 1 2 2010 2011 Consultation on 2012 -2014 Strategy ? 3 2012 2013 2014 2015 Consultation on 2015 -2018 Strategy ? 8

Phase 1 Activities • Consider information obtained – Country and audit firm surveys – Key stakeholders (IFIAR ? ) • Recommendations to IAASB June 2010 – Informing the IAASB strategy and work program 2012 – 2015 – Informing design of Phase 2 – Activities in 2011? 9