International Auditing and Assurance Standards Board

International Auditing and Assurance Standards Board Convergence with International Standards on Auditing John Kellas, IAASB Chairman CReCER Regional Conference June 14, 2007

Agenda • Why convergence matters • The challenges of convergence • Meeting the challenges of convergence • Conclusion

Acceptance • Wide acceptance of international standards • “Wong” Report • 12 Key Standards for Sound Financial Systems

Benefits • International investors • Applicable to listed and unlisted entities • International regulators • Auditing firms • Educators and learners

Convergence vs. Adoption • Meaning of “convergence” • Adoption is preferred approach • All the advantages of convergence • All countries may contribute to standard-setting process • Fastest way to eliminate / minimize differences

Challenges • Starting point • Established national standard setting process vs. new economies • Authority of standard setters • Standard setting no longer a function of most IFAC member bodies • Cultural differences

Challenges (Cont.) • Philosophical differences • Rules vs. principles / objectives • The scope of the standards • Application of standards to all types and sizes of entity by all sizes of audit firm • Translation • Frequency and complexity of changes

Meeting the Challenges • Working in partnership with national standard setters • National standard setters to address matters of domestic concern • Guidance on modifications to ISAs issued in July 2006 • Composition of the IAASB • Dialogue with ‘stakeholders’ • IAASB Consultative Advisory Group and others • Development of high-quality standards

High-Quality Standards • High-quality standards are: • Clear • Not capable of different interpretations • Capable of translation • Enforceable • Designed to achieve a high-quality audit • ‘Jurisdictionally neutral’ • Strike a balance between principles and rules • Subject to due process • Subject to public oversight

Conclusion • Adoption of international standards should be supported by • International Quality Control Standards • IFAC Code of Ethics for Professional Accountants • Implementation guidance and advice • Training and education • Monitoring and enforcement

Conclusion (Cont’d) • 100+ countries use, base their standards on, ISAs • Significant announcements by • Canada, China, India and the USA • Project to adopt ISAs in the European Union • Contribution of IFAC Member Bodies in Latin America is recognized

International Federation of Accountants www.ifac.org

International Auditing and Assurance Standards Board