R E G I O N A L A U D I T T R A I N I N G A U D I T ISA changes 2010

© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in [country in which the publication has been printed]. FOR INTERNAL USE ONLY 2 Program de instruire dezvoltat de KPMG pentru Curtea de Conturi a Romaniei - Continuarea certificarii personalului de specialitate al Curtii de Conturi a Romaniei ca auditori certificati international Overview ♦ Effective for Financial statements with periods beginning on or after 15 December 2009 ♦ 17 new or revised ISAs ♦ 19 redrafted ISAs ♦ Main changes: − standardized structure − standardized terms − ‘shall’ (means ‘must’)

© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in [country in which the publication has been printed]. FOR INTERNAL USE ONLY 3 Program de instruire dezvoltat de KPMG pentru Curtea de Conturi a Romaniei - Continuarea certificarii personalului de specialitate al Curtii de Conturi a Romaniei ca auditori certificati international ISA 600 ♦ Group audits − Emphasis on responsibilities of the group engagement partner − Group auditor required to : Determine whether it is appropriate to accept the engagement Understand the group and its components, including group-wide controls and significant risks Determine component materiality Communicate with the component auditor Be appropriately involved in the work of component auditors Document: analysis of components and work performed, involvement with auditors of significant components, group audit requirements

© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in [country in which the publication has been printed]. FOR INTERNAL USE ONLY 4 Program de instruire dezvoltat de KPMG pentru Curtea de Conturi a Romaniei - Continuarea certificarii personalului de specialitate al Curtii de Conturi a Romaniei ca auditori certificati international ISA 540 ♦ Accounting estimates − Understand management’s process around estimates − Identification of new or revisions to existing accounting estimates − Evaluate the degree of estimation uncertainty − Develop an estimate or a range to evaluate management’s estimate when the auditor determines that management has not adequately addressed estimation uncertainty − Review indicators of possible management bias; alternative assumptions and outcomes − Assess adequacy of disclosures − Document conclusions

© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in [country in which the publication has been printed]. FOR INTERNAL USE ONLY 5 Program de instruire dezvoltat de KPMG pentru Curtea de Conturi a Romaniei - Continuarea certificarii personalului de specialitate al Curtii de Conturi a Romaniei ca auditori certificati international ISA 550 ♦ Related parties (RPs) − Risk based approach in understanding the entity − Heightened risk of fraud − Understand the rationale for and perform additional procedures on significant or unusual transactions − Inspect bank confirmations and minutes of meetings with shareholders/ those charged with governance (TCWG), as well as other documentation as considered necessary − Additional procedures when related party is not previously identified by management − Adequacy of financial statement disclosure − Document: names of RPs and nature of relationship − Communicate significant matters TCWG

© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in [country in which the publication has been printed]. FOR INTERNAL USE ONLY 6 Program de instruire dezvoltat de KPMG pentru Curtea de Conturi a Romaniei - Continuarea certificarii personalului de specialitate al Curtii de Conturi a Romaniei ca auditori certificati international ISA 320 ♦ Materiality in planning and performing an audit − New term: Performance materiality (PM) replaces SMT − Materiality is a matter of judgment and no longer a mechanical calculation − Revise materiality: new information would have caused auditor to have determined a different amount initially − Document: materiality level and factors considered in determination

© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in [country in which the publication has been printed]. FOR INTERNAL USE ONLY 7 Program de instruire dezvoltat de KPMG pentru Curtea de Conturi a Romaniei - Continuarea certificarii personalului de specialitate al Curtii de Conturi a Romaniei ca auditori certificati international ISA 260 ♦ Communication with those charged with governance − Evaluate adequacy of two-way communication between the auditor and those charged with governance − Different methods of communication based on the nature and size of the entity − Sets out matters to be communicated i.e. scope and timing of audit, significant findings, auditor independence (listed entities only) and responsibilities

© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in [country in which the publication has been printed]. FOR INTERNAL USE ONLY 8 Program de instruire dezvoltat de KPMG pentru Curtea de Conturi a Romaniei - Continuarea certificarii personalului de specialitate al Curtii de Conturi a Romaniei ca auditori certificati international Other ISAs (1 of 4) ♦ ISA Audit documentation − Additional documentation requirements in new/revised ISAs − Modifications include: Comments received during internal and external inspections Procedures performed prior to audit report date but documented after audit report date (infrequent) − Documentation of modifications to the audit file after the report release date should include: The reason for the changes When the changes were made Who made the changes Who reviewed the changes

© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in [country in which the publication has been printed]. FOR INTERNAL USE ONLY 9 Program de instruire dezvoltat de KPMG pentru Curtea de Conturi a Romaniei - Continuarea certificarii personalului de specialitate al Curtii de Conturi a Romaniei ca auditori certificati international Other ISAs (2 of 4) ♦ ISA 705, ISA Audit reports − Replaces ISA 701 − ISA 705: Qualified audit opinion − ISA 706: Emphasis of matter paragraph − New paragraph in the audit report: „Other Matters” Matters that are relevant to the understanding of the financial statements, audit report or the auditor’s responsibilities Communicate EoM or Other Matters paragraph to Those Charged With Governance regarding proposed wording

© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in [country in which the publication has been printed]. FOR INTERNAL USE ONLY 10 Program de instruire dezvoltat de KPMG pentru Curtea de Conturi a Romaniei - Continuarea certificarii personalului de specialitate al Curtii de Conturi a Romaniei ca auditori certificati international Other ISAs (3 of 4) ♦ ISA Written representations − Audit engagement letter should include Management’s: Acknowledgement of responsibility for the preparation and fair presentation of the financial statements Agreement to provide appropriate information and access -Representation letter: confirmation of the statements included in the audit engagement letter

© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in [country in which the publication has been printed]. FOR INTERNAL USE ONLY 11 Program de instruire dezvoltat de KPMG pentru Curtea de Conturi a Romaniei - Continuarea certificarii personalului de specialitate al Curtii de Conturi a Romaniei ca auditori certificati international Other ISAs (4 of 4) ♦ ISA Evaluation of misstatements − Evaluate the need for the revision of the audit strategy − Communicate misstatements on a timely basis