To enhance the clarity of international standards, the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC) has issued exposure drafts of four proposed standards in a new drafting style.
The release of these documents marks the beginning of the IAASB's ambitious 18-month program to re-draft standards and to develop new standards using the new style. The following four proposed standards have been re-drafted in the new style:
– International Standard on Auditing (ISA) 240, The Auditor's Responsibility to Consider Fraud in an Audit of Financial Statements;
– ISA 300, Planning an Audit of Financial Statements;
– ISA 315, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement; and
– ISA 330, The Auditor's Procedures in Response to Assessed Risks.
Key elements of the new drafting style include: basing the standards on objectives, as opposed to procedural considerations; use of the word “shall” to identify requirements that the professional accountant is expected to follow in the vast majority of engagements; eliminating the present tense to describe actions by the professional accountant, which some had regarded as ambiguous in terms of obligation; and structural improvements to enhance the overall readability and understandability of the standards.
“The Clarity Project was undertaken primarily to deal with our use of the present tense, which it had been suggested was ambiguous in effect. We have also taken the opportunity to make changes to improve our drafting conventions to ensure that IAASB standards are understandable and capable of being translated and to facilitate international convergence,” said IAASB Chairman John Kellas. “Through consultation with regulators, the IAASB's Consultative Advisory Group, other standard setters and users of the standards, we developed this drafting style which we believe will clarify the requirements in the standards and make the standards easier to understand and to adopt.”
The board also issued an exposure draft of proposed amendments to the preface to the international standards on quality control, auditing, assurance and related services to accompany the drafts.
Comments on the exposure drafts are requested by February 28, 2006. The drafts may be viewed by going to http://www.ifac.org/EDs. Comments may be submitted by email to EDComments@ifac.org.