International Public Sector Accounting Standards Board Chair Andreas Bergmann on plans for a global public sector accounting framework.

My Lord Mayor, CIPFA President Jaki Meekings Davis, Distinguished Guests, Ladies, and Gentlemen.  Thank you, Jaki, for your kind introduction and for your welcome to this marvelous occasion, being held in such a historic building.

125 years - 1885 to 2010. 1885, apart from being the year in which CIPFA was founded and incorporated not long after as the Corporate Treasurers and Accountants Institute, it was also the year of the first election in which the electoral franchise in England was extended to all men; and the audience tonight evidences significant further progress in this regard!  In the same year professional football was legalized in Britain and, close to my heart, it was the year in which Gottfried Daimler patented the first motorcycle. A memorable year!

The Chinese Auditing Standards Board (CASB) and the International Auditing and Assurance Standards Board (IAASB) met today to discuss convergence of international standards.

“As the largest developing country in the world, China firmly supports the efforts of the International Federation of Accountants (IFAC) and the IAASB to promote international convergence of auditing standards,” stated Dr. Wang Jun, Vice Minister of the Chinese Ministry of Finance and Chairman of the CASB. “The fundamental principle of drafting the Chinese auditing standards is to continuously improve them, as well as achieve continuous and comprehensive convergence with international auditing standards in line with the development of Chinese market economy and the overall trend of economic globalization and international convergence.”

“International convergence of auditing standards—the importance of which has been further manifested during the global financial crisis—is a strategic objective for the IAASB and IFAC,” stated IAASB Chairman Prof. Arnold Schilder. “We applaud the great efforts and the enormous progress that China is making toward international convergence. The Chinese government and the Chinese accountancy profession made the decision to converge and moved rapidly to give effect to that decision. We hope this serves as a model for developing countries and countries with economies in transition.”

Previously, the parties had signed a milestone joint statement in December 2005, which pointed out that establishing and improving a single set of high-quality global auditing standards is a logical response to the trend of economic globalization. It also acknowledged the key role these standards play in reducing the risk of decision-making by investors for efficient capital allocation, as well as in promoting economic development and maintaining financial stability all over the world.

In recent years, the IAASB has conducted the Clarity Project to enhance the clarity of International Standards on Auditing (ISAs), which involved the application of new drafting conventions to all ISAs and substantial revisions of a number of ISAs. On February 27, 2009, the Clarity Project reached its completion with the approval of the Public Interest Oversight Board (PIOB). Auditors worldwide now have access to 36 newly updated and clarified ISAs and a clarified International Standard on Quality Control (ISQC).

In accordance with the principle of continuous and comprehensive convergence, the CASB has completed the revision of Chinese Standards of Audit (CSAs), and achieved full convergence with the clarified ISAs. The revised CSAs were officially released in early November 2010, and are effective for audits of financial statements for periods beginning on or after January 1, 2011. During the process of international convergence, the CASB made limited additions it considered necessary and maintained some standards dealing with matters that are not specially covered in ISAs to reflect China’s unique circumstances and business requirements, such as standards for the verification of capital contributions and communication between predecessor and successor auditors. The IAASB recognizes that such additional requirements may be necessary and are acceptable where they do not conflict with ISAs.

About the CASB and the CICPA
As a specialized board under the Chinese Institute of Certified Public Accountants (CICPA), the CASB is responsible for developing CPA practice standards. Founded in 1988, the CICPA, in line with relevant laws and regulations, exercises the function of, among others, providing services to its members, monitoring service quality and professional ethics of members, regulating the CPA profession and coordinating the relationship within and beyond the CPA profession. The CICPA has more than 7,800 group members and over 170,000 individual members. The CICPA became a member of IFAC in 1997.

About the IAASB
The IAASB develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by IFAC.

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 164 members and associates in 125 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The International Auditing and Assurance Standards Board (IAASB) today released a progress report on its project to monitor the implementation of its clarified ISAs. The report—Implementation of the Clarified International Standards on Auditing (ISAs)—highlights key findings from the first phase of the IAASB’s initiative to develop a process for gathering information to help it evaluate the effective and consistent implementation of the clarified ISAs. Following completion of the Clarity Project,* the first phase of this IAASB initiative has focused on learning more about early implementation experiences.

“Effective implementation is key to realizing the full benefits of the clarified ISAs,” said Prof. Arnold Schilder, Chairman of the IAASB. “With extensive implementation efforts now underway around the world, it is important for the IAASB to obtain timely feedback on the clarified ISAs from a variety of key stakeholders. The information we gather from this first phase and subsequent efforts of our monitoring project will help the IAASB continue to meet its objective of developing high-quality ISAs.

To promote awareness and understanding of the clarified ISAs, the IAASB also has released a second series of ISA modules,** focusing on some of the new and more significantly revised ISAs. These modules cover ISAs that address materiality in planning and performing an audit of financial statements, the evaluation of identified misstatements, written representations, using the work of an auditor’s expert, and auditor reporting.

As further support for ISA implementation, IAASB staff has released Auditor Considerations Regarding Significant Unusual or Highly Complex Transactions, a questions-and-answers (Q&A) publication. The Q&A highlights considerations in the ISAs that are relevant to auditing such transactions, often an area that gives rise to risks of material misstatement of the financial statements.

“These new resources will assist people responsible for adopting and implementing the clarified ISAs and, in particular, auditors as they prepare for the upcoming audit season,” explained IAASB Technical Director James Gunn. He added, “This additional support underscores the IAASB’s commitment to facilitating effective implementation of the ISAs and, ultimately, to enhancing audit quality.”

The new ISA modules are available to download free of charge from the IAASB Clarity Center on the IAASB’s website (www.iaasb.org/clarity-center). The IAASB encourages IFAC members, associates, regional accountancy bodies, and firms to use these materials and to promote their availability to their members and employees.

About the IAASB
The IAASB (www.iaasb.org) develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by IFAC.

About IFAC
IFAC (www.ifac.org) is the global organization for the accountancy profession, dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It is comprised of 159 members and associates in 124 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

Notes to Editor:

* The Clarity Project, completed by the IAASB in March 2009, resulted in the issuance of 36 ISAs and one International Standard on Quality Control in a new style that is easier to understand, translate, and implement. Approximately half of the ISAs also contain substantive new requirements intended to improve practice in a variety of respects. The new set of clarified ISAs is now in effect for 2010 year-end audits.

** Developed by IAASB staff, each of the ISA modules combines short video presentations, accompanying slides, and supporting notes that explain the key principles of, and major changes in, individual ISAs.

This comprehensive implementation guide is intended to help practitioners understand and efficiently apply the clarified International Standards on Auditing (ISAs) to audits of small- and medium-sized entities (SMEs). First issued in 2007 and developed with the Canadian Institute of Chartered Accountants, it is designed for use by all practitioners. Volume 1 covers the basic concepts of a risk-based audit in conformance with the ISAs.