As it may well be known to general public, beginning January 1, 2005 more than 7,000 companies from all European states have adopted IFRS reporting. The companies that have applied these standards were requested to proceed as such by new regulations imposed by public exchanges.
The 2005 adoption in the European Union of IFRSs endorsed by the European Commission, and the adoption of IFRSs in other countries, have given rise to requests for auditors to audit, review, or otherwise report on various forms of financial and non-financial information during the transition to adopting IFRSs as the entity’s financial reporting framework.
IFAC and the IAASB (International Auditing and Assurance Standards Board) have agreed to publish some guidance to auditors in those countries where IFRSs are adopted. This guidance will avoid unnecessary variations in practice, and its use will be helpful to auditors and their clients.
In addition, auditing standards are a key factor in the regulation of the audit profession. If the profession is to perform high quality work in the public interest, it needs to have high quality standards that are set in the public interest. The primary duty of all professional accountants, wherever they work, is to serve the public interest.
A key change in the regulation of the audit profession in recent years has been the move to increased regulation of the performance of auditors and/or the performance of the professional accountancy bodies. So there are now two additional areas of regulation. These are:
· Monitoring of audit quality.
· Monitoring the self-regulatory activities of the professional accountancy bodies as they apply to audit engagements and auditors.