Presentation by Dawn McGeachy, Member, IFAC SMP Committee at the International Federation of Accountants & Institute of Chartered Accountants of Jamaica Business Development Conference, March 18, 2014
Presentation by Dawn McGeachy, IFAC SMP Committee Member & Implementation Guidance Task Force Chair, at MIA-IFAC Regional SMP Forum, in Kuala Lumpur, Malaysia, November 18, 2015
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Presentation given by SMP Committee Chair Giancarlo Attolini at the IFAC Board Meeting in September 2012 on the current and upcoming activities of the IFAC SMP Committee in each of its strategic focus areas: Input to Standard-Setting, Input to Public Policy and Regulation, Adoption and Implementation, and Development and Quality.
Presentation by Wendy W.Y. Yung, Member of Professional Accountants in Business Committee, at the CAPA 2015 Conference, in Seoul, Korea, October 27-29, 2015.
Presentation by Dawn McGeachy, Member, IFAC SMP Committee at the International Federation of Accountants & Institute of Chartered Accountants of Jamaica Business Development Conference, March 18, 2014
Presentation by Dawn McGeachy, IFAC SMP Committee Member & Implementation Guidance Task Force Chair, at MIA-IFAC Regional SMP Forum, in Kuala Lumpur, Malaysia, November 18, 2015
Keeping up with standards and regulation is biggest challenge facing SMPs. Insight from IFAC SMP Quick Poll Findings and tips for audit efficiency are discussed in this presentation by Mats Olsson, Member, IFAC Small and Medium Practices Committee, at the KibR Seminar in Warsaw on November 7, 2013.
An orientation slide deck on the IFAC SMP Committee's Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities (ISA Guide) that IFAC member bodies may use in training and orientation seminars to introduce staff and members to the ISA Guide.
Presentation given by SMP Committee Chair Giancarlo Attolini at the IFAC Board Meeting in September 2012 on the current and upcoming activities of the IFAC SMP Committee in each of its strategic focus areas: Input to Standard-Setting, Input to Public Policy and Regulation, Adoption and Implementation, and Development and Quality.
Presentation by Wendy W.Y. Yung, Member of Professional Accountants in Business Committee, at the CAPA 2015 Conference, in Seoul, Korea, October 27-29, 2015.
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James Gunn, Managing Director, Professional Standards, addresses the 6th Brazilian Conference on Accounting and Independent Auditing June 13, 2016, in Sao Paolo, Brazil.
This slide presentation has been prepared by the IAASB’s Auditor Reporting Implementation Working Group to assist IAASB members, national standard setters, auditors and others promote awareness of the new and revised Auditor Reporting standards within their respective jurisdictions.
Presentation by Warren Allen, President, International Federation of Accountants at the Institute of Certified Public Accountant of Greece, in Athens, Greece, September 19, 2014
Presentation by Arnold Schilder, IAASB Chairman, at the Public Interest Oversight Board's 10th Anniversary Seminar, in Madrid, Spain, September 30, 2015.
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On May 18, 2016, IAASB Chairman Prof. Arnold Schilder presented "The IAASB's Work to Enhance Audit Quality" to the Standing Advisory Group of the US Public Company Accounting Oversight Board in Washington, D.C.
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Listeners and stakeholders are also encouraged to share their thinking with the IAASB on less complex entities through IFAC's survey on issues relating to audits of less complex entities.
Presentation from the webinar "State-Owned Enterprises & Professional Accountancy Organizations in PFM Reform: Recovery Post COVID-19" (August 11, 2021).
IFAC and the World Bank Centre for Financial Reporting Reform hosted a joint Regional Small- and Medium-sized Practices (SMP) Forum for Europe and Central Asia on May 31 in Vienna, Austria.
The Forum provided the opportunity to discuss addressing the challenges and opportunities SMPs and medium-sized entities (SMEs) face.
Andreas Noodt, Member, IFAC Small and Medium Practices Committee speaks at FEE & ICAEW Event on February 19, 2014 about the SMP Commitee's Guide to Review Engagements. The Guide, published in December 2013, aims to provide implementation support for practitioners in conducting review engagements in compliance with International Standard on Review Engagements (ISRE) 2400 (Revised).
Presentation by Phil Cowperthwaite, IFAC SMP Committee member at the Malaysian Institute of Accountants, Auditing Micro-entitiesEfficiently and Effectively, March 23, 2012, Kuala Lumpur.
James Gunn, Managing Director, Professional Standards, addresses the 6th Brazilian Conference on Accounting and Independent Auditing June 13, 2016, in Sao Paolo, Brazil.
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Presentation by Warren Allen, President, International Federation of Accountants at the Institute of Certified Public Accountant of Greece, in Athens, Greece, September 19, 2014
Presentation by Arnold Schilder, IAASB Chairman, at the Public Interest Oversight Board's 10th Anniversary Seminar, in Madrid, Spain, September 30, 2015.
IFAC and the World Bank Centre for Financial Reporting Reform hosted a joint Regional Small- and Medium-sized Practices (SMP) Forum for Europe and Central Asia on May 31 in Vienna, Austria.
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Listen to Prof. Roger Simnett, IAASB member and Audits of Less Complex Entities Working Group Chair, discuss the challenges and possible actions that the IAASB is exploring in its current Consultation Paper, which is open for public comment until September 12, 2019.
Listeners and stakeholders are also encouraged to share their thinking with the IAASB on less complex entities through IFAC's survey on issues relating to audits of less complex entities.
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IFAC and the World Bank Centre for Financial Reporting Reform hosted a joint Regional Small- and Medium-sized Practices (SMP) Forum for Europe and Central Asia on May 31 in Vienna, Austria.
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This presentation by Paul Thompson, Deputy Director, SME & SMP Affairs, explores the challenges currently faced by SMP's, provides regulators' observations and offers tips for audit efficiency.
Presentation by Stathis Gould at The 6th Annual Symposium on Sustainable Business Non-Financial and Integrated Reporting, Baruch College, November 1, 2013
Presentation by Szymon Radziszewicz, IFAC Senior Technical Manager, outlining some of the tools available to professional accountancy organizations (PAOs) to assist them in development, growth, and compliance with IFAC Statements of Membership Obligations.
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Growing Your Practice: Review, Compilation and AUP
1. Page 1 | Confidential and Proprietary Information
EMPOWERING ASIA’S SMALL &
MEDIUM BUSINESS HUB
Giancarlo Attolini
SMP Committee Chair
Growing Your Practice: Review,
Compilation and AUP
CA Sri Lanka-SAFA-IFAC SMP Regional
Forum
January 26, 2016
2. Page 2 | Confidential and Proprietary Information
Guide to Review Engagements
• International Standard on
Review Engagements (ISRE)
2400 (Revised)
• The Guide to Review
Engagements available on
www.ifac.org/SMP
• Translation in progress in
multiple languages
3. Page 3 | Confidential and Proprietary Information
Uses of Review Engagements
Uses Commentary
Increased
Credibility
Independent credibility to the F/S—attract new
investors, obtain finance.
Enhanced
Confidence
Provides accountability & confidence to shareholders,
management, partners, government agencies and
regulators, and other stakeholders.
Plan for Success
Enables the business to plan for the future—prepares
growing business for transition to audit or preparing to
sell.
4. Page 4 | Confidential and Proprietary Information
SME Benefits of Review Engagements
SME Benefits Commentary
Alternative to
Audit
Audit exemptions for small- and medium-sized
entities (SMEs) are becoming more prevalent.
Less time consuming for client.
Lower Cost A review engagement is normally a lower cost for an
entity than an audit.
Limited
Assurance
Limited assurance obtained on the F/S as opposed to
no assurance with a compilation.
5. Page 5 | Confidential and Proprietary Information
SMP Benefits of Review Engagements
SMP Benefits Commentary
Bespoke Advice
Adds value to the client and provide a basis for
bespoke advice
Opportunities—
Additional
Service
Ensure the client is aware of how and when a review
engagement can be used
Deepens relationship with the client
Opportunities for cross-selling
Flexibility with
Consistency
Consists primarily of inquiry and analytical procedures,
allowing practitioners to tailor procedures based on
their professional judgment and experience
6. Page 6 | Confidential and Proprietary Information
• International Standard on
Related Services (ISRS)
4410 (Revised)
• Guide to Compilation
Engagements at
www.ifac.org/SMP
• Published September
2015
New Guide to Compilation Engagements
7. Page 7 | Confidential and Proprietary Information
Uses of Compilation Engagements
Uses Commentary
Expertise of a
Professional
is Required
Expertise of the practitioner is required by the client to compile
the financial statements but no assurance is required.
Within Other
Engagements
Compiled financial statements may be a useful, and ancillary
addition to, other engagements, such as income and cash flow
projections, financial or tax planning services, or taxation
reporting engagements.
Transaction
Purposes
Any number of transaction related purposes may be supported
by a compilation report. For example, a change to the entity’s
ownership or restructured financing (i.e. merger to acquisition).
8. Page 8 | Confidential and Proprietary Information
SME Benefits of Compilation Engagements
SME Benefits Commentary
Alternative
Service
Trend towards higher audit exemptions.
May be less time consuming for client.
Cost
Effective
A compilation engagement is normally a lower cost for an entity
than an audit or a review engagement.
Reported
Involvement
From a
Professional
Accompanying report states expertise in accounting and financial
reporting applied to assist in the preparation and presentation as
well as adherence to relevant ethical requirements.
9. Page 9 | Confidential and Proprietary Information
SMP Benefits of Compilation Engagements
SMP Benefits Commentary
Customized
Advice
Add value to the client and provide a basis for customized
advice. Financial reporting requires judgment, therefore
management may benefit from the assistance of the
practitioner, particularly when making significant
judgments.
Opportunities
– Additional
Service
Ensure the client is aware of how and when a compilation
engagement can be used.
Opportunities for cross-selling.
Flexibility Consists of use of records, documents, explanation and
other information provided by management allowing
practitioners to tailor procedures, if any, based on
professional judgment and experience.
10. Page 10 | Confidential and Proprietary Information
Benefits of the Guides
Guide Benefits Commentary
Extracts from
the Standard
Direct extracts from ISRS 4410 (Revised) and ISRE 2400
(Revised)
Tailored
Examples
Illustrated examples and Consider Points, including
efficiency suggestions.
Appendices Checklists, correspondence samples and reports for
adaption.
Staff Training Day-to-day reference tool for staff – can be used for
training.
Ensure SMP staff develop a consistent approach.
11. Page 11 | Confidential and Proprietary Information
The Four Elements in each Guide
Accepting
Planning
Performing
Reporting
12. Page 12 | Confidential and Proprietary Information
Agreed-Upon Procedure Engagements I
• ISRS 4400, Engagements to Perform Agreed-
Upon Procedures Regarding Financial Information
• Agreed-Upon Procedures (AUP) Engagements
– Report based on factual findings
– No assurance is expressed
– Report is not distributed publicly
• Greater demand due to changing landscape
13. Page 13 | Confidential and Proprietary Information
Agreed-Upon Procedure Engagements II
• Procedures of an audit nature which practitioner,
the entity, and any appropriate third parties have
agreed
• Perform procedures on individual items of
financial data. For example:
– Accounts receivable/payable
– Verifying cash balances
– Special reviews of loan portfolios
– Due diligence when buying or selling a business
14. Page 14 | Confidential and Proprietary Information
• IFAC SMP Committee: www.ifac.org/SMP
• Follow us on Twitter: IFAC_SMP
• IFAC Global SMP Survey www.ifac.org/smp
• Join us on LinkedIn: IFAC SMP Community
• Global Knowledge Gateway www.ifac.org/Gateway
IFAC Resources
ISRE 2400 (Revised) was issued in September 2012 and comes into effect for periods ending on or after December 31, 2013. The standard addresses the practitioner’s responsibilities when engaged to perform a review of historical financial statements (when the practitioner is not the auditor of the entity) and the form and content of the practitioner’s report on the financial statements.
The Guide to Review Engagements was published in December 2013 and provides non-authoritative guidance on applying ISRE 2400 (Revised). It is not to be used as a substitute for reading the standard, but rather as a supplement to support consistent implementation of the standard.
Guide to Review Engagements
1. Turkish, IN PROGRESS
2. Estonian
3. Bulgarian
4. Swedish, IN PROGRESS
5. Spanish, IN PROGRESS
6. Polish, IN PROGRESS
SMEs that do not require a statutory audit may still want some degree of independent assurance to increase the credibility of their statements; in which case, a review can be an ideal solution.
A review engagement may be better suited to the needs of some SMEs and place less strain on the client’s time and resources. It also normally costs less than an audit.
[Note. For example, in Denmark many audit exempt organizations are required to have a review engagement instead].
SMP Benefits
Through obtaining a detailed understanding the business and its environment the practitioner should be able to use industry knowledge gained from other clients to add value to the client and provide bespoke advice.
Undertaking the review engagement onsite will enable the practitioner to effectively communicate with the client, build strong relationships and improve staff efficiency levels.
Ensure the client is aware of how and when a review engagement can be used and the value of this being undertaken by a qualified, objective and independent practitioner.
A review engagement using ISRE 2400 (Revised):
- Consists primarily of inquiry and analysis, allowing practitioners to rely more on their professional judgment and experience rather than detailed substantive testing.
- Ensures a consistent work effort on all such engagements.
The Guide addresses the responsibilities of a practitioner (who is not the entity’s auditor) when engaged to perform a compilation of general purpose historical financial statements prepared in compliance with an AFRF and in accordance with the International Standard on Related Services (ISRS) 4410 (Revised).
ISRS 4410 came into effect for compilation engagement reports dated on or after July 1, 2013.
A copy of the Guide may be downloaded free of charge by visiting the IFAC website.
They may also be supplemental in nature (i.e. for interim purposes to supplement an annual review or audit report).
Ensure the client is aware of how and when a compilation engagement can be used (i.e. not appropriate when assurance is required).
Opportunities for cross-selling (i.e. the IESBA ethical requirements of Section 290 and 291, Independence, do not apply to compilation services).
Checklists & forms in the Review Guide include:
Client Acceptance/Continuance Checklist (Appendix B)
Sample Engagement Letter (Appendix C)
Checklist for Understanding the Entity (Appendix D)
Examples of Analytical Procedures (Appendix E)
Going-Concern Events and Conditions (Appendix F)
Sample File Completion Checklist (Appendix G)
Example of Written Representations from Management (Appendix H)
Useful appendices included in the compilation guide include:
A client acceptance and continuance checklist – this checklist will not only assist the practitioner in meeting ethical and professional standard requirements, but is also in compliance with ISQC 1 requirements
The sample engagement letter expands upon the sample that is provided in ISRS 4410 and provides practical practice considerations that are commonly included in engagement correspondence such as ownership of working papers, dispute resolution matters, time and fee inclusions and engagement termination.
A file completion checklist is included that will guide firm personnel through the file closing process including completion of procedures, file review, financial statement approval, and ISRS 4410 requirements.
Finally, an alternate compilation report is provided that is applicable to an engagement to compile financial information required for a regulatory compliance purpose.
Each of these appendices may be tailored to the circumstance and can be adapted to include the both firm and client specific information.
There are four major elements to a review and compilation engagement. The Guides have been developed around each of these elements and describe each phase of the engagement in detail. This makes the Guides a powerful training tool.
For example, four major elements of a review engagement.
Accepting
There should always be a rational (logical) purpose for a client to request a review engagement. A review engagement is typically requested to enhance the degree of confidence that intended users will place on the financial statements.
The engagement preconditions are designed to ensure that before any work commences, management understands the full extent of its responsibility for the preparation of the financial statements and for providing the practitioner with access to relevant information and personnel.
Planning
Planning involves determining the nature, timing, and extent of the procedures needed to obtain sufficient appropriate evidence for the review engagement. There is a significant emphasis on professional judgment. It is important to fully understand the entity and its environment.
Inquiry and analysis is directed to all financial statement areas that exceed materiality and areas where material misstatements are likely to arise (e.g. areas prone to misstatement due to matters such as estimation uncertainty, complexity, or need for judgment).
Performing
The review procedures chosen may not be limited to just inquiry and analysis, they could potentially include substantive tests of details and obtaining external confirmations. Additional Procedures are required where the practitioner becomes aware that the financial misstatements may be materially misstated.
Reporting
The final step in performing a review engagement is to form an appropriate conclusion (unmodified or modified) based on the evidence obtained. This includes an evaluation of the identified misstatements. Effective and continuous two-way communication between the practitioner, engagement team, management, and those charged with governance is important. This will help minimize any (particularly last-minute) surprises.
Agreed-Upon Procedures (AUP) Engagements: the practitioner provides a report based on factual findings regarding financial information—no assurance is expressed. The report is not distributed publicly—it is restricted to those parties that have agreed to the procedures. The engagement can be based on the IAASB’s ISRS 4400, Engagements to Perform Agreed-Upon Procedures Regarding Financial Information.
Clients may not need an audit, but may greatly benefit from an AUP engagement to satisfy banking or vendor needs (for example, to advance a business transaction, or verify to management that certain financial reporting processes and controls are operating effectively).
Now to AUP – the standard is old and the IAASB, with input from the SMP Committee of Katharine Bagshaw is on the TF, is updating it.
According to ISRS 4400, the objective of an AUP engagement is to carry out procedures of an audit nature to which the practitioner, the entity, and any appropriate third parties have agreed and to report on factual findings. These engagements may entail the practitioner performing certain procedures concerning individual items of financial data (for example, accounts payable, accounts receivable, purchases from related parties, and sales and profits of a segment of an entity), a financial statement (for example, a balance sheet) or even a complete set of financial statements.
For example, the practitioner may be engaged to help the client evaluate the validity of their accounts payable at a certain date. Procedures may comprise:
Checking the addition of the trial balance of accounts payable prepared by the client at a specific date and comparing the total to the balance in the related general ledger account.
Comparing a list of major suppliers and the amounts owing at a specific date to the related names and amounts in the trial balance.
Obtaining suppliers’ statements or requesting suppliers to confirm balances owing at a specific date, and comparing such statements or confirmations to the amounts in the trial balance. For amounts that do not agree, obtaining and reviewing reconciliations from the client.
IFAC offers a wide host of resources and information related to the latest news within the profession, particularly as it relates to the SMP environment.
Links to these various mediums are provided here.