1. Convergence with International Standards on Auditing
International Auditing and Assurance Standards Board
Convergence with International Standards on Auditing
John Kellas, IAASB Chairman
CReCER Regional Conference
June 14, 2007 1

2. Agenda Why convergence matters The challenges of convergence
Meeting the challenges of convergence
Conclusion

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

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

5. 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

6. Challenges Starting point Authority of standard setters
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

7. 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

8. 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

9. 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

10. 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

11. 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

12. International Federation of Accountants 1