Interim Terms of Reference (IAASB) – CPA Philippine Auditing Standards

The mission of the International Federation of Accountants (IFAC), as set out in its constitution, is “the worldwide development and enhancement of an accountancy profession with harmonized standards, able to provide services of consistently high quality in the public interest.” In pursuing this mission, the IFAC Board has established the International Auditing and Assurance Standards Board (IAASB) to develop and issue, in the public interest and under its own authority, high quality auditing and assurance standards for use around the world. The IFAC Board has determined that designation of the IAASB as the responsible body, under its own authority and within its stated terms of reference, best serves the public interest in achieving this aspect of its mission.

Philippine Standards on Auditing - International Auditing and Assurance Standards Board Interim Terms of Reference

The IAASB functions as an independent standard-setting body under the auspices of IFAC. The objective of the IAASB is to serve the public interest by setting high quality auditing and assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession. The IAASB achieves this objective by:

  • Establishing high quality auditing standards and guidance for financial statement audits that are generally accepted and recognized by investors, auditors, governments, banking regulators, securities regulators and other key stakeholdersacross the world.
  • Establishing high quality standards and guidance for other types of assurance services on both financial and non-financial matters.
  • Establishing high quality standards and guidance for other related services.
  • Establishing high quality standards for quality control covering the scope of services addressed by the IAASB.
  • Publishing other pronouncements on auditing and assurance matters, thereby advancing public understanding of the roles and responsibility of professional auditors and assurance service providers.

The members of the IAASB are appointed by the IFAC Board to serve on the IAASB. The IAASB comprises eighteen members, ten of whom are put forward by member bodies of IFAC, five of whom are put forward by the Forum of Firms, and three public members who may be members of IFAC member bodies but shall not be members in public practice. In addition, a limited number of observers, from bodies that have an appropriate interest in issuing or endorsing standards, may be appointed who will have the privilege of the floor but will not be entitled to vote. These observers would be expected to possess the technical skills to participate fully in IAASB debates and attend IAASB meetings regularly to maintain an understanding of current issues. Candidates put forward, including the Chair of the IAASB, are considered for appointment by IFAC’s Nominating Committee. Candidates for appointment as public members may be put forward by any individual or organization. The selection process is based on the principle of “the best person for the job.” IAASB members serve for three years, with one third of the IAASB membership rotating every year. Continuous service on the IAASB is limited to two (2) consecutive three (3) year terms, unless that member is appointed to serve as Chair for a further period of not more than three years. The IAASB issues International Standards on Auditing (ISAs) as the standards to be applied by auditors in reporting on historical financial information. It also issues International Standards on Assurance Engagements (ISAEs) as the standards to be applied by practitioners in assurance engagements dealing with information other than historical financial information, International Standards on Quality Control (ISQCs) as the standards to be applied for all services falling under the Standards of the IAASB, and International Standards on Related Services (ISRSs) as the standards to be applied on related services, as it considers appropriate. IAASB Standards contain basic principles and essential procedures together with related guidance in the form of explanatory and other material.

The IAASB issues Practice Statements as appropriate to provide interpretive guidance and practical assistance in implementing its Standards and to promote good practice.

In developing its Standards and Practice Statements, input is sought from the IAASB’s Consultative Advisory Group,2 national standard setters and others so as to obtain a broad spectrum of views. The IAASB exposes draft Standards for public comment, and ordinarily exposes draft Practice Statements for public comment unless it decides that there are particular circumstances justifying non-exposure. The exposure period will ordinarily be no shorter than 90 days. Respondents’ comments are posted on the IAASB’s web site after the end of the exposure period.

The IAASB cooperates with national standard setters to link their work with IAASB’s own in preparing and issuing Standards with an aim to share resources, minimize duplication of effort and reach consensus and convergence in Standards at an early stage in their development. It also promotes the endorsement of ISAs by national standard setters, legislators and securities exchanges and promotes debate with users, regulators and practitioners throughout the world to identify user needs for new Standards and guidance.

Each IAASB meeting requires the presence, in person or by simultaneous telecommunication link, of at least twelve appointed members.

Each member of the IAASB has one vote. The affirmative vote of at least two-thirds of members present at a meeting in person or by simultaneous telecommunications link or by proxy, but not less than twelve, is required to approve Standards. IAASB meetings to discuss the development, and to approve the issuance, of Standards, guidance or other pronouncements intended to advance the public understanding of the roles and responsibilities of professional auditors and assurance service providers are open to the public. Agenda papers, including minutes of the meetings of the IAASB, are published on the IAASB’s web site. IAASB publishes an annual report, outlining its work program, activities and progress made in achieving its objectives during the year.

IFAC will review the effectiveness of IAASB’s processes at least every three years.

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Red Magpantay

This guy has a vision. A vision to create a much simpler world. Where every process is just a walk in the park. His Motto: "Life is short, focus on what really matters". He is an employee of a multinational consulting firm, a great avenue for collaborating new ideas.

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One Response to Interim Terms of Reference (IAASB) – CPA Philippine Auditing Standards

  1. Jalisa Weyers says:

    I have been gone for a while, but now I remember why I used to love this blog. Thank you, I will try and check back more frequently. How frequently do you update your web site?