Archives For consultation

oil barrels

By David York, head of auditing practice, ACCA

There is an old saying that a fool can ask a question that a wise man cannot answer. Actually, in the age of the Internet I should not say that. Not particularly because of a change in the tools available to the wise man, but because I ought to check the actual wording of the statement and clarify whether it is a saying, a proverb, a truism or some other particular part of the English language.

Just for once, I’m not going to reach for the tools. Instead, let’s examine a question: ‘Do users of audited financial statements believe the introduction of a new section in the auditor’s report describing the matters the auditor determined to be of most significance in the audit will enhance the usefulness of the auditor’s report? If not, why?’ It is best not to examine the wording of the question too closely else we begin speculating on the meaning of ‘useful’ in this context, or on whether those answering can be expected to predict the future.

The question is the first posed in a public consultation by the International Auditing and Assurance Standards Board (IAASB). This ‘exposure draft’ is huge at 200 pages and is hugely important. There is a proposed new auditing standard on communicating ‘Key Audit Matters’, major revisions to five existing standards and a raft of conforming amendments to others. This will bring about the most visible change in auditing globally for well over a decade. For a listed entity, the auditor will publicly report the most important of the matters already communicated privately to, for example the company’s Audit Committee. This is not just a cut and paste, as the audiences are different and the very fact of disclosure will inevitably affect how preparers and auditors treat a matter.

The exposure draft is a significant stage in a project that has been firmly based on research and extensive outreach to stakeholders. Indeed, ACCA has already provided views in response to a 2011 Consultation Paper and a 2012 Invitation to Comment. Our own activities, including roundtables and research, have confirmed the need for change because investors are demanding more informative reporting.

In parallel with the exposure draft, which is open for comment up to 22 November 2013, the IAASB is proposing a field test to enable auditors and companies to experiment and the IAASB to learn whether its standards need further refinement to enhance the usefulness of the auditor’s report.

To get an answer to the question, using the internet as the research tool, it might be foolish to suggest that the IAASB would like every user of audited financial statements on the planet to state their belief and explain why, or why not, the proposals are good:

‘Do users of audited financial statements believe the introduction of a new section in the auditor’s report describing the matters the auditor determined to be of most significance in the audit will enhance the usefulness of the auditor’s report? If not, why?’

You can do that on the IAASB website (you will need to register). If you are an ACCA member or student you can also email your view to us and we will take your views into account when we respond to the consultation. See

A staff-prepared document highlighting considerations that may be of assistance to those who plan to undertake field testing is available on the IAASB website.


By Paul Cooper, Corporate Reporting Manager, ACCA

The IFRS Foundation’s review of its governance gives insight into how the IASB (International Accounting Standards Board) structures itself as an organisation.

The Foundation’s ‘Drafting Review’ proposes to formalise within its constitution a change which it has already made. The roles of the IASB Chair (principally responsible for standard-setting) and oversight (executive) functions are now held by different people. This is because the latter role might be seen to conflict with the functions of the Chair, such as with fund-raising.

Comments for the ‘Drafting Review’ were requested by 23 October 2012.

An executive director has already been appointed, so the Foundation wishes to change its constitution accordingly as soon as possible. The executive director has a staff role in the Foundation, and is not a member of the IASB.

The change was in fact a recommendation of an earlier review of the Foundation’s governance. ACCA’s response to the review in March 2011, supported the recommendation, but questioned the appropriateness of the title of the role, which at the time was to be chief executive officer.  The executive role reports to the IASB chair, so arguably the term ‘CEO’ is not entirely suitable.

ACCA’s response to the current consultation reiterates our support for the separation of the chair and executive functions, and support the title of executive director (rather than CEO) for the latter role.

The IASB also has a vice-chair now, part of whose role under the constitution is to represent the chair externally. The earlier governance review identified the matter of travel demands on the time of the IASB chair. As a solution, ACCA supported the appointment of a vice-chair.

The IASB positions referred to in this blogpost are currently held by the following people:

Chair – Hans Hoogervorst

Vice-Chair – Ian Mackintosh

Executive Director – Yael Almog