Objective
The objective of the project was to redraft the close off documents of ISA 320 (Revised), Materiality in Planning and Performing an Audit, and ISA 450 (Revised), Evaluation of Misstatements Identified during the Audit, in accordance with the clarity drafting conventions agreed by the IAASB to be applied to all ISAs.
Background
In December 2004, the IAASB issued an exposure draft of proposed ISA 320, Audit Materiality.
The IAASB gave due consideration to the comments received on the proposed ISA. The basis for the IAASB's conclusions is explained in the Basis for Conclusions: Close Off Document - ISA 320 (Revised), Materiality in Planning and Performing an Audit, and Close Off Document - ISA 450 (Revised), Evaluation of Misstatements Identified during the Audit.
The IAASB approved the close off documents of ISA 320 (Revised) and ISA 450 Revised) (i.e., following the IAASB's current drafting conventions) in May 2006. Those documents incorporate the changes based on the comments received on the December 2004 exposure draft.
Task Force progress / Board discussions to date
In November 2006, the IAASB approved an exposure draft of proposed ISA 320 (Revised and Redrafted), Materiality in Planning and Performing an Audit and proposed ISA 450 (Revised and Redrafted), Evaluation of Misstatements Identified during the Audit.
The proposed ISAs have been redrafted in accordance with the clarity drafting conventions agreed by the IAASB to be applied to all ISAs.
The IAASB received forty-six comment letters from a variety of respondents.
Overall, respondents were supportive of the redraft of the close off documents. The majority of respondents were of the view that the criteria for determining the requirements have been applied appropriately and consistently. Some respondents proposed further improvements.
The IAASB discussed a Summary of Significant Comments and Task Force Recommendations and proposed final ISAs 320 and 450 at its March 2008 meeting. Significant comments relating to ED-ISA 320 (Revised and Redrafted) included a revised objective and new definitions. Significant comments relating to ED-ISA 450 (Revised and Redrafted) included the move of text on forming an opinion on the financial statements from ED-ISA 450 (Revised and Redrafted) to ED-ISA 700 (Redrafted), "The Independent Auditor's Report on General Purpose Financial Statements;" a revised objective; the deletion of the requirement to distinguish between factual, judgmental and projected misstatements; the deletion of a requirement relating to communication with those charged with governance; and the issue of audit differences vs. misstatements.
The IAASB approved ISA 320 (Revised and Redrafted) and ISA 450 (Revised and Redrafted) at its June 2008 meeting. Updated Agenda Item 9-A and Updated Agenda Item 9-B reflect in marked text the changes based on decisions taken at the meeting.
The final standards were published in October 2008 after the Public Interest Oversight Board (PIOB) has confirmed that due process was followed in their development.