The close of an EC consultation on the
adoption of ISAs in Europe has heralded increased statements in
their favour.
The UK Auditing Practices Board (APB) issued
33 clarified ISAs as audit standards for the UK and Ireland on 13
October, becoming one of the first major jurisdictions to do
so.
APB chairman Richard Fleck said the new ISAs
are more rigorous and clearer than existing auditing standards in
any country.
“The APB hopes that these standards will be
mandated for use within the European Union in the near future,”
Fleck added.
The Committee of European Securities
Regulators (CESR) also supports the introduction of ISAs in
Europe.
CESR has said there is growing international
acceptance of ISAs and many potential benefits of harmonised
auditing standards in the EU.
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By GlobalDataCESR supports a European endorsement process
but says this should be used with precaution and changes made only
in “highly rare circumstances”, otherwise it could erode the
coherence of the standards and their international
acceptability.
The Institute of Chartered Accountants in
England and Wales (ICAEW) is also in favour of mandating ISAs in
Europe. However, ICAEW executive director Robert Hodgkinson said
the institute disagrees with an endorsement process that allows for
“add-ons or carve-outs”.
Hodgkinson said if there is a “seed of doubt”
regarding what exact standards have been used, it can have an
adverse effect on the ability to take an audit report at face
value.
The EC consultation suggested three options
for the scope of an adoption: only the statutory audits of listed
companies; the statutory audits of all limited companies except
small companies; or, all statutory audits in the EU.
The ICAEW wants ISAs applied to all
audits.
“Having two or more sets of standards would
make it expensive for the audit market and also a bit confusing
because inevitably one will be thought of as better than the other
and certain audits will be seen as second rate,” Hodgkinson
said.
Hodgkinson said infrastructure must be in
place to ensure audits are not unnecessarily onerous.
“It is about making sure that the training,
software, commercial packages and working paper packages are there
for firms that can’t afford to develop their own,” he
explained.
Hodgkinson said while the standards themselves
are important, having the practical tools needed to deliver audits
is just as vital. The ISAs come with this complete package.
