Audit
The International Auditing and Assurance Standards Board (IAASB) has released three quality management standards that help auditors manage quality issues in their own firms and for clients.
They include international standards on quality management (ISQM 1) and on engagement quality reviews (ISQM 2), and a revised standard on quality management in financial statement audits (ISA 220). The standards become effective from 15 December 2022.
The IAASB has also published further plans for its projected 2021 release of standards for the audits of smaller companies and organisations (‘less complex entities’). The system will be built on a simplified version of International Standards on Auditing (ISAs), using a risk-based approach to clarify what assessments are needed.
Related IAASB resources on audit quality and less complex entities are available here.
Covid-19
The IFRS Foundation has released an advisory document helping accountants decide whether a business is a going concern, helping them make sounder judgements when Covid-19 is impacting revenues. The advice will help accountants decide whether a business will bounce back after the pandemic ends or go under anyway.
Sustainability
The CDP (formerly the Carbon Disclosure Project), Climate Disclosure Standards Board (CDSB), Global Reporting Initiative (GRI), International Integrated Reporting Council (IIRC) and Sustainability Accounting Standards Board (SASB) have issued a joint paper that launches a prototype climate-related financial disclosure standard. The launch follows a published shared vision for a comprehensive corporate reporting system last year.
The International Federation of Accountants (IFAC) has backed the planned creation of an international sustainability standards board, rationalising the current fragmented environmental and social corporate reporting guidance. IFAC issued a response to the IFRS Foundation’s consultation paper on sustainability reporting in which it encourages the accountancy profession to support a sustainable future.
The International Organisation of Securities Commissions (IOSCO) has also backed the creation of a sustainability standards board, noting the need for a transparent standard-setting architecture with a robust and inclusive governance structure.
Meanwhile, sustainability reporting standards are still being developed by the GRI. New standards on the holistic reporting of tax, and water use and effluent are now in force.
Agreed procedures
The International Federation of Accountants (IFAC) has updated its guidance on how accountants should help companies frame agreed-upon procedures (AUP) to aid their work, reflecting an incoming standard on the topic from the International Auditing and Assurance Board (IAASB), in force from January 2022.
IFAC has also released revised advice on the range of audit, review, compilation and agreed-upon procedures services SMPs can provide, making sure they comply with international standards, also including the new IAASB AUP standards.
Ethics
The International Ethics Standards Board for Accountants (IESBA), the International Auditing and Assurance Board (IAASB), and the South African Independent Regulatory Board for Auditors (IRBA) have released guidance on how auditors should be aware of increased fraud, within companies and by external actors, during the Covid-19 pandemic. This includes more accounting fraud; illicit applications for government support; procurement and product fraud; impersonation; and insurance scams.
IFRS taxonomy
The International Accounting Standards Board (IASB) has updated its IFRS Taxonomy 2020 to include advice on new disclosures required by interest rate benchmark reform. This amended IFRS 9 financial instruments, IAS 39 financial instruments: recognition and measurement, IFRS 7 financial instruments: disclosures, IFRS 4 insurance contracts and IFRS 16 leases.
Financial instruments
The International Public Sector Accounting Standards Board (IPSASB) has issued non-authoritative amendments to its standard IPSAS 41 on financial instruments to clarify requirements for classifying and recognising some key public sector specific financial instruments. These include monetary gold, currency in circulation, International Monetary Fund (IMF) quota subscriptions, and special drawing rights (SDRs).
