External Audit

Question 1

IFAC (“The International Federation of Accountants”)

Answer 1

Serves to strengthen the accountancy profession worldwide, to service the public interest and promote adherence to high quality standards

Question 2

IAASB (“The International Auditing and Assurance Standards Board”)

Answer 2

Subsidiary of IFAC and issues the International Standards on Auditing (IASs)

Question 3

Process of ISA Creation

Answer 3

1. Identify new projects (issues)
2. IAASB will set up the task force to go and have a look at it in more details
3. Consultation with the interested parties - e.g. Big 4 Firms
4. Will create the draft - public exposure for 120 days
5. It will be approved

Question 4

Use of ISAs

ISAs only apply to the audit of financial information split into 3 parts which should be followed and viewed as one - basic principles, essential procedures and guidance

Answer 4

1. Standards give you principles and you should apply them
2. They give you guidance
3. They give you Explanatory materials
4. You must use all 3, you must see the standards in its entirety
5. They are built on historic information
6. Only depart if you can justify it

Question 5

Is IFAC able to enforce its standards?

Answer 5

No