Query of the week - Applicability of "Force of law" Auditing Standards
Existing non-Force of Law Auditing Standards still mandatory
Auditing Standards (Charter)
Query of the week - new auditing standards
Institute welcomes release of Auditing Standards
AUASB 'makes' 2007 ‘Force of Law’ Auditing Standards
Query of the week - Applicability of "Force of law" Auditing Standards
as reported in ANT37/2007
Q: Do the new "force of law" auditing standards (ASA's) have the force of law on all audit engagements?
A: The newly issued ASAs have the force of law by virtue of the Corporations Act, Section 307A - "the auditor ... must conduct the audit or review in accordance with the auditing standards". For entities that do not come within the scope of the Corporations Act, the applicability of auditing standards to members of the Institute and CPA Australia is set out in APES 410 at http://www.apesb.org.au/APES_410.pdf.
Note that compliance with the auditing standards is also required by section 989CA for full and half year audits of financial services licensees. Section 989CA is basically in the same terms as section 307A which applies for full and half year audits under Chapter 2M.
Top
Existing non-Force of Law Auditing Standards still mandatory
as reported in ANT36/2007
In ANT 21 we published a Q&A on the status of auditing standards that have not been reissued by the AUASB as "Force of Law" ASA standards. Since the query was published, the APESB has issued APES 410 which revised and replaced APS 1.1.
This new APES requires that members of the professional bodies continue to mandatorily comply with the former AuASB (non Force of Law) Standards that have yet to be withdrawn or re-issued by the new AUASB. This is because "auditing and assurance standards" contained within APES 410 refers to those standards issued by the AuASB which have not yet been revised and reissued (whether as standards or as guidance) by the AUASB, to the extent that they are not inconsistent with the AUASB standards. Please note that this definition applies only in relation to reports for reporting periods commencing on or after 1 July 2006.
Top
Auditing Standards
as reported in Charter August 2006
This article written by Brett James CA and Robert Mifsud FCA has restricted access rights.
Query of the week - new auditing standards
as reported in ANT21/2006
Q: I have just been going through the list of new force of law auditing standards and note that not everything has been converted to an ASA. What is the status of those old AUSs that have not been converted, namely 106, 108, 110, 522, 524, 804, 806, 808, 810, 902 (partly covered by ASRE 2410) and 904?
A: All these AUSs apart from AUSs 522 and 524 apply to non-statutory assurance engagements, such as Assurance Engagements Other Than Audits or Reviews of Historical Financial Information (AUS 110). They would therefore still be applicable on non-statutory engagements until such time that they are revised and reissued by the AUASB. The AUASB plan is to revise them in the course of 2006-2007.
<p>
AUS 522: Audit Evidence Implications of Externally Managed Assets of Superannuation Provident or Similar Funds and AUS 524: The Auditor's Use of the Work of the Actuary and the Actuary's Use of the Work of the Auditor in Connection with the Preparation and Audit of a Financial Report, are listed in regulation 10.5.01(1) and so are auditing standards under the Corporations Act for years ending on or before 30 June 2006 (s.1455(4)) but aren't enforceable by ASIC (s.1455(5)). Of course, they continue to be apply to members of the Institute and CPAA through APS 1.1, assuming that they are not withdrawn.
<p>
For years ending on or after 1 July 2006, it would seem appropriate to regard AUS 522 and AUS 524 as providing guidance. However, they wouldn't be relevant to the extent (if any) that they were found to be inconsistent with the legally enforceable standards (eg the standard on audit evidence).
Top
Institute welcomes release of Auditing Standards
as reported to in ANT16/2006
The Institute welcomes the release of the Force of Law Auditing Standards (ASAs) issued by the Australian Auditing & Assurance Standards Board (AUASB) last Friday, 28 April 2006. They are now available for download at http://www.auasb.gov.au. We remind Australian auditors that the standards will apply in Australia for financial periods commencing as from 1July 2006 (ie generally 30 June 2007 year ends).
The Standards were completed, after extensive public consultation, and will provide Australia with an internationally comparable set of standards (they largely conform with International Auditing Standards).
The Institute supports the 35 new Standards, which it believes do not radically change the existing Auditing Standards except that they will be legally enforceable under the Corporations Act, whereas the current Standards are enforceable by the Accounting Bodies.
Aside from some updating, the major changes simply alter the language within the Standards, to reflect their new legal status (the most obvious change is the term 'shall' being replaced with 'should', because 'shall' is interpreted as mandatory. The Standards remain 'principles-based' with the 'auditor expected (to continue) to use professional judgment in light of the given circumstances in order to achieve the objectives of the audit'.
The Force of Law Auditing Standards will apply to audits under the Corporations Act and audits of a financial report for any other purpose. The new Standards are also a requirement of the Accounting Bodies.
Further information regarding the Force of Law Standards is available from the Australian Auditing & Assurance Standards Board at http://www.auasb.gov.au.
A useful commentary to the new Force of Law Standards is Auditing Standard ASA 100 'Preamble to AUASB Standards' which sets out 'the AUASB's intentions as to how other AUASB Standards are to be understood, interpreted and applied'. As detailed in paragraph 9 of ASA 100, the Standards are in 2 parts: Mandatory Requirements (which are in bold type) and Explanatory Guidance (in 'normal' type).
Top
AUASB 'makes' 2007 ‘Force of Law’ Auditing Standard
as referred to in ANT15/2006
The Auditing and Assurance Standards Board (AUASB) is expected to 'make' today the new auditing standards that will have 'force of law' under section 336 of the Corporations Act and they will be available from the AUASB website - http://www.auasb.gov.au early next week.
This project commenced with the passage of the CLERP 9 legislation which reconstituted the Auditing Standards Board and gave it the power to issue auditing standards that had the force of law under section 336 of the Corporations Act.
At the time the, legislation gave interim endorsement to our existing auditing standards via transitional provisions in section 1455(1). It gave the Board until 30 June 2006 to revise and reissue all existing Auditing Standards to ensure they were compatible with their new legal status. Interim endorsement would cease at this time.
The release of these new standards will reflect the completion of Phase 1 of the project which has involved revising all existing standards to reflect their new legal status. EDs for all these revisions were released in the latter half of 2005. More details are available on the AUASB website http://www.auasb.gov.au and in an article in December 2005 Charter entitled "Setting the standards" (page 64).
The AUASB will now be involved in monitoring the reissue of these standards as legislative instruments through Parliament prior to June 30 2006. The Auditing Standards will then be operative, as legal instruments, for audits of financial reports for financial reporting periods commencing on or after 1 July 2006 (that is, generally 30 June 2007 year ends). Phase 2 will commence after 1 July 2006 and will focus on reviewing the revised audit standards to further improve quality and clarity.
Top |
|
The Institute’s education and training pathway is the preferred choice for industry professionals.
Considering a career as a Chartered Accountant? Looking for the next step in your professional life?
The Institute is leading the debate in the areas that matter most to business and the accounting profession. 
The Institute produces an invaluable suite of tools, guidance, products and services to help members in their work. 
Print this Article
Email this Article
