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October 8, 2017 at 1:55 am #409811kasiak
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I would like to kindly ask for the following clarification on the below two cases, as I’m getting confused:
1. Quotes from the ACCA BPP study text – “For example, in the UK, the Financial Reporting Council Board sets ISAs” vs. “International Standards on Auditing are set by the International Auditing and Assurance Standards Board”.
My question is: What ISAs the Financial Reporting Council Board sets? For me ISAs are only one – International Standards on Auditing, which are set by the International Auditing and Assurance Standards Board.
2. “ISAs do not override the local regulations. In the event that the local regulations differ or conflict with ISAs, member bodies should comply with the obligations of members set in the IFAC Constitution as regards these ISAs (ie encourage changes in local regulations to comply with ISAs)” vs. “Furthermore, the auditor needs to be able to refer to globally recognized standards in the audit report.(…) The fact that audits are conducted in accordance with ISAs also gives regulators of the audit profession a framework against which to judge auditors. If auditors are not carrying out audits in accordance with ISAs, they will be prohibited from undertaking audit assignments”.
My questions are:
a) Does auditor must follow the local regulations or International Standards on Auditing?
b) What does the book mean by globally recognized standards in the audit report? Aren’t they just International Standards on Auditing”, which are set by the International Auditing and Assurance Standards Board?
All those terms are just super confusing to me…:(
Thank you very much!
P.S. I was tying to keep it as short as possible:(October 8, 2017 at 8:58 am #409830Ken GarrettKeymaster
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Q1 Top quote from the FRC “The International Standards on Auditing (UK) (ISAs (UK)) and International Standard on Quality Control (UK) (ISQC (UK)) are based on the International Standards on Auditing (ISAs) and International Standard on Quality Control (ISQC) of the same titles that have been issued by the International Auditing and Assurance Standards Board (IAASB), published by the International Federation of Accountants (IFAC) in 2009, and are used with the permission of IFAC.”
ISAs are developed by IFAC/IAASB, but to bring them into force in the UK they are then issued by the FRC and appear with ‘UK’ after their names. Changes are minimal.
(a) My understanding is that the auditors can’t carry out actions that are against local regulations or laws. So, to take a ridiculous example, if the local law said that auditors were not allowed to attend stock takes, they couldn’t, even if the ISA said they should. This might lead them to conclude that under local laws they couldn’t carry out a proper audit and in the audit report they could then refer to the problem of not being able to comply with the ISA.
ISAs are globally recognised standards.
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