1. Current IAASB Developments
Prof. Arnold Schilder, IAASB Chairman
James M. Sylph, Executive Director, Professional Standards
Korean Institute of Certified Public Accountants Seminar
Seoul, South Korea
November 12, 2013

2. Responding to the Changing Audit Environment
Auditor Reporting
Responding to the Changing Audit Environment
Evolving nature of financial reporting
Changing demand from users (“we want to hear more”)
Global financial crisis triggered key questions e.g.,
Quality of auditing – effectiveness, professional judgment, professional skepticism
Relevance of audit and trust in the audit profession
In June, IAASB unanimously approved Exposure Draft
Informed by research, public consultation and global outreach

3. Opinion preferably first New section to address Key Audit Matters
Auditor Reporting
Key Proposals
Opinion preferably first
New section to address Key Audit Matters
New section to address Going Concern
New section to address Other Information when such information is presented with the audited financial statements
Other suggested improvements to enhance transparency or clarify responsibilities
Other Suggested Improvements include:
Statement about independence and other ethical responsibilities
Naming of the engagement partner (listed entities)
Improved description of auditor responsibilities and key features of the audit

4. Key Audit Matters (KAM) – New ISA 701
Auditor Reporting
Key Audit Matters (KAM) – New ISA 701
Objective: To communicate those matters that, in the auditor’s judgment, were of most significance in the audit of the financial statements of the current period
Required for audits of financial statements of listed entities
Selected from matters communicated with TCWG (e.g., Audit Committees)
Engagement partner and team often will have an intuitive assessment of the areas of most significance or difficulty
Note that: Proposed standard includes considerations for areas of “significant auditor attention” and robust application material to guide the auditor’s determination of KAM to be communicated in the auditor’s report

5. Going Concern (GC) – Revisions to ISA 570
Auditor Reporting
Going Concern (GC) – Revisions to ISA 570
Heightened attention on GC, particularly in light of the global financial crisis
New section in all auditor’s reports including statements about
The appropriateness of management’s use of the GC basis of accounting in preparing the entity’s f/s
Whether the auditor has identified a material uncertainty that may cast significant doubt on the entity’s ability to continue as a GC
Active liaison with the IASB and US FASB to facilitate holistic approach
New GC section will address:
- The appropriateness of management’s use of the GC basis of accounting in preparing the entity’s financial statements
Whether the auditor has identified a material uncertainty (MU) that may cast significant doubt on the entity’s ability to continue as a GC
Related to IASB Liaison:
Status and planned actions of IASB and FASB will need to be considered as the IAASB finalizes its auditor reporting proposals
Also monitoring with interest the PCAOB project on going concern

6. Potential Benefits of the Proposed ISAs
Auditor Reporting
Potential Benefits of the Proposed ISAs
Because it’s the key deliverable in a f/s audit, changes to auditor’s report will enhance its communicative value, and
Have positive benefits to audit quality or users’ perception of it
Increase users’ confidence in the audit and the financial statements
Renew focus of the auditor on matters to be reported
Enhance communications between the auditor and TCWG
Increase/ improve attention by management and TCWG to f/s disclosures

7. Exposure draft open for comment through November 22, 2013
Auditor Reporting
Looking Ahead
Exposure draft open for comment through November 22, 2013
Represents a significant change in practice, but critical to the continuing perceived value of the audit and relevance of the profession
Now is the time to begin thinking about how to prepare for the future to help ensure success
From the point of view of both practitioners and users

8. Proposed Audit Quality Framework
A complex, multi-faceted topic, in which ISAs are not the only influence
Recognizes importance of financial reporting frameworks and corporate governance environments as important context factors
Contributions to Audit Quality at engagement level, firm level and national level
Contributions to strengthened public confidence in financial reporting
Plans to finalize the Framework in December 2013

9. Proposed Audit Quality Framework
Audit Quality Interactions
The Audit Quality Framework demonstrates the importance of appropriate interactions between stakeholders as links in the financial reporting supply chain

10. Other Relevant IAASB Initiatives
Other Information (OI) – ISA 720 (Revised)
Objective of strengthening the auditor’s responsibilities for OI and establishing reporting requirements
Scheduled for approval in Dec 2013, at which time the need for re- exposure will be considered
Auditing Financial Statement Disclosures
Aim of the project is to enhance the auditor’s work effort in relation to both quantitative and qualitative disclosures
Exposure of changes to ISAs in mid-2014, also non-authoritative guidance

11. ISA Implementation Monitoring – Key Findings
Professional Skepticism
ISQC 1 and ISA 220 – Quality Control
Specific focus on adequacy of EQCR
ISA 600 – Group Audits
Adequate involvement of group auditor, including in ‘letterbox’ audits, and component materiality
ISA 315 – Risk Identification and Assessment
Identification of significant risks, and work effort on controls relevant to the audit

12. IAASB’s Strategy and Related Work Program for 2015–2019
Priority Attention on auditing and quality control standards
Address ISA Implementation Monitoring findings, to achieve enhanced consistency and effectiveness of practice
Quality Control, professional skepticism, ISA 315, ISA 600
Support effective implementation of new Auditor Reporting standards
Address auditing issues related to financial institutions, including FV estimates and loan impairment
Continued attention to understanding ISA related inspection findings

13. IAASB’s Strategy and Related Work Program for 2015–2019 (continued)
Proactively monitor developments in Integrated Reporting; consider assurance standard when appropriate
Innovation, Needs and Future Opportunities (INFO) Working Group to explore other assurance developments
Monitor adoption and implementation of review, compilation and other assurance standards
Continued dialogue and collaboration with stakeholders
Collective input assists in finding meaningful and workable solutions to some of the very challenging issues facing the profession today