Developed in conjunction with CPA Canada, this guide aims to help professional accountants in practice, especially those operating in small- and medium-sized practices (SMPs), in conducting review engagements in compliance with International Standard on Review Engagements (ISRE) 2400 (Revised), Engagements to Review Historical Financial Statements. 

This third edition of the guide features enhancements to the two sample manuals, as well as other refinements for clarity and consistency with International Standard on Quality Control (ISQC) 1. The guide contains the requirements set out in ISQC 1 in addition to implementation guidance, including discussion material and an integrated case study that can be used as the basis for education and training.

Today, the International Federation of Accountants (IFAC) released the third and final installment in its three-part publication series to help small- and medium-sized practices (SMPs) implement the International Auditing and Assurance Standards Board’s (IAASB) suite of quality management standards. Installment Three: Monitoring and Remediation provides tips and guidance for the practical implementation of the monitoring and remediation of a firm’s system of quality management.  

Installment Three addresses: 

• The factors driving the nature, timing and extent of the monitoring activities. 
• The scope and outcome of monitoring activities to establish a feedback loop for continuous improvement.   
• Establishing a framework for evaluating findings, identifying deficiencies, and evaluating the severity and pervasiveness of deficiencies, which includes investigating root causes.   
• Responding to identified deficiencies and communication about monitoring and remediation.  
• The ongoing evaluation of the system of quality management.   

Installment Three includes multiple documentation aids covering annual monitoring and evaluation of the system of quality management, cyclical inspection of completed audits and other engagements and a monitoring and remediation report to assist practitioners. It also continues the case study introduced in the previous installments. 

Installment One of the series addressed the mindset change the new standards require and the shift in focus from quality control to quality management. Installment Two covered development of an implementation plan for quality management.  

This series joins IFAC’s collection of available resources that support quality management implementation, including webinars, articles and videos, as well as the IAASB first-time implementation guides, all of which are available at ifac.org/qualitymanagement. 

This publication series and other resources like it underscore IFAC’s commitment to supporting SMPs and empowering them to provide the best possible service to their clients. IFAC acknowledges and appreciates feedback from IFAC’s Small and Medium Practices Advisory Group and Forum of Firms representatives in the development of the series. 

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 180 members and associates in more than 135 jurisdictions, representing millions of professional accountants in public practice, education, government service, industry, and commerce. 

The International Federation of Accountants (IFAC) has submitted a comment letter to the International Auditing and Assurance Standards Board (IAASB) on its Exposure Draft for the proposed amendments to Standards resulting from revisions to the definitions of  listed entity and public interest entity (PIE) in the IESBA Code. 

IFAC appreciates the efforts of the IAASB in working with the IESBA to harmonize definitions and terminology in this important area and is broadly supportive of the proposed changes. Within our response we raise several challenges: 

• Existing expectations gaps could be compounded by language implying that standards should be required to meet heightened stakeholder expectations for PIEs.   
• Further clarity needs to be provided about the extent of work the auditor is required to carry out to identify PIEs that are not labelled as such by law, regulation, or other requirements.  
• The extension of the requirement to provide written confirmation of auditor independence to those charged with governance should also set clearer timings for when this should take place.  
• Considering the level of activity that will be needed for implementation, the proposed 18 to 24-month period following approval of these amendments might not be sufficient. 

IFAC will remain engaged with the IAASB’s consultation process until the publication of a final standard and supporting guidance materials. 

The International Federation of Accountants (IFAC) has submitted a comment letter to the International Auditing and Assurance Standards Board (IAASB) on its exposure draft for proposed revisions to ISA 240, which covers fraud.

IFAC supports the IAASB’s focus on fraud, but the proposals raise several concerns for the global profession. Any approach to these issues should reflect the fact that the primary responsibility for preventing and detecting fraud rests with management. Extant requirements within the standard provide an effective basis for dealing with the auditor’s responsibilities in relation to fraud, so the IAASB should take an evidence-based approach to amendments, ensuring that any changes in approach that increase costs for auditors and clients can be justified through added value.

Some of the proposals may lead to a widening of the existing expectation gap—especially the changes related to transparency in the auditor’s report. The proposed requirements may also result in extra work and effort on all audits regardless of whether specific fraud risks have been identified, and without corresponding increases in value. The resulting approach might not be practical or cost effective for many audits and is unlikely to make a meaningful difference to audit quality in many cases.  

IFAC will remain engaged with the IAASB’s consultation process until the publication of a final standard and supporting guidance materials.

The International Federation of Accountants (IFAC) has submitted a comment letter to the International Ethics Standards Board for Accountants (IESBA) on its exposure draft for proposed revisions to the IESBA Code relating to the use of external experts.

External experts can improve the quality of reporting and assurance. They are an important resource, especially for small- and medium-sized practices, where there is often less in-house specialist knowledge. Standards in this area should not discourage the use of experts, and any requirements should be clear—and consistent with the corresponding reporting and assurance standards.

IFAC’s response highlights the potential that proposed revisions could undermine the quality of reporting and assurance engagements by creating inappropriate barriers to the use of external experts. Proposals for subjective evaluation of competence, capability, and objectivity could prevent the use of experts based on perceived, rather than meaningful, challenges to ethical behavior. New requirements for information gathering in some areas appear excessive and impractical. The exposure draft also has notable inconsistencies in approach and terminology with the International Auditing and Assurance Standards Board's (IAASB) proposed International Standard on Sustainability Assurance (ISSA) 5000.

IFAC will remain engaged with the IESBA’s consultation process until the publication of a final revision and supporting guidance materials.

The International Federation of Accountants (IFAC) has submitted a comment letter to the International Ethics Standards Board for Accountants (IESBA) on its exposure draft for the proposed revisions to the Code of Ethics related to sustainability.

The global business community and the accountancy profession are making a significant transformation with respect to sustainability disclosures. The IESBA has an important role, like other standard setters, in this transformation.

IFAC appreciates the significant resources and effort the IESBA has devoted to this important project. However, the actions of standard setters, regulators, and policy makers must be undertaken and calibrated with priority for both being an effective influence on the sustainably transformation and bringing along relevant stakeholders in the business community, including the accountancy profession, on the journey. It is important for the IESBA to be a positive influence in this transformation through the creation of practical, easily understandable, and sufficiently flexible standards.

IFAC has raised three key areas in which the IESBA can enhance the practicality of implementation:

• Reduce complexity and call for transparency from practitioners with respect to relevant, jurisdiction-specific sustainability assurance oversight, as well as enforcement where they conduct engagements.
• Remove barriers to financial statement auditors providing sustainability assurance to the same client.
• Revise or remove proposed requirements related to value chain considerations.

IFAC will remain engaged with the IESBA’s consultation process until the publication of a final standard and supporting guidance materials.

The Fast Future With IFAC is a conversational podcast series about small- and medium-sized practices (SMPs) adapting to the rapidly changing global economy.

Episode Seven features excerpts from a presentation to IFAC's SMP Advisory Group by Paul Gisby, Director, Professional Services at Accountancy Europe.

This episode is the first in a three-part series on talent management.

Click below or visit IFAC's iTunes podcast channel to listen to this episode.

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