ISAE 3000 (Revised), Assurance Engagements Other Than ...

1 International Exposure Draft Auditing April 2011. and Assurance Comments requested by September 1, 2011. Standards Board Proposed International Standard on Assurance Engagements (ISAE). ISAE 3000 ( revised ), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information Proposed Consequential Amendments International Framework for Assurance Engagements ISAE 3402, Assurance Reports on Controls at a Service Organization Exposure Draft of Proposed ISAE. 3410, Assurance Engagements on Greenhouse Gas Statements REQUEST FOR COMMENTS. The International Auditing and Assurance Standards Board (IAASB) approved this exposure draft, proposed International Standard on Assurance Engagements (ISAE) 3000 ( revised ), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information, for publication in April 2011.

2 This proposed ISAE may be modified in light of comments received before being issued in final form. Respondents are asked to submit their comments electronically through the IAASB website ( ), using the Submit a Comment link on the Exposure Drafts and Consultation Papers page. Please note that first-time users must register to use this feature. All comments will be considered a matter of public record and will ultimately be posted on the IAASB website. Comments can also be faxed to the attention of the IAASB Technical Director at +1 (212) 856- 9420, or mailed to: Technical Director International Auditing and Assurance Standards Board 545 Fifth Avenue, 14th Floor New York, New York 10017 USA. Comments should be submitted by September 1, 2011.

3 Copies of this exposure draft may be downloaded free of charge from the IAASB website at The IAASB develops auditing and Assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The objective of the IAASB is to serve the public interest by setting high-quality auditing and Assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and Assurance profession.

4 The structures and processes that support the operations of the IAASB are facilitated by IFAC. The mission of IFAC is to serve the public interest, strengthen the worldwide accountancy profession and contribute to the development of strong international economies by establishing and promoting adherence to high quality professional standards, furthering the international convergence of such standards and speaking out on public interest issues where the profession's expertise is most relevant. Copyright April 2011 by the International Federation of Accountants (IFAC). All rights reserved. Permission is granted to make copies of this work to achieve maximum exposure and feedback provided that each copy bears the following credit line: Copyright April 2011 by the International Federation of Accountants (IFAC).

5 All rights reserved. Used with permission of IFAC. Permission is granted to make copies of this work to achieve maximum exposure and feedback.. 2. CONTENT. Page Explanatory Memorandum Introduction .. 4. Background .. 4. Significant Matters .. 4. Project Timetable .. 12. Guide for Respondents .. 12. Exposure Draft Proposed International Standard on Assurance Engagements (ISAE) 3000 , Assurance Engagements Other Than Audits or Reviews of Historical Financial Information 16. Proposed Consequential Amendments International Framework for Assurance Engagements .. 78. ISAE 3402, Assurance Reports on Controls at a Service Organization .. 118. Exposure Draft of Proposed ISAE 3410, Assurance Engagements on Greenhouse Gas Statements .. 120. 3. EXPLANATORY MEMORANDUM.

6 Introduction This memorandum provides background to, and an explanation of, the proposed revised International Standard on Assurance Engagements (ISAE) 3000 , Assurance Engagements Other Than Audits or Reviews of Historical Financial Information. The International Auditing and Assurance Standards Board (IAASB) approved the proposed ISAE in March 2011 for exposure. Background Extant ISAE 3000 was approved by the IAASB in December 2003. At the time of its release, the IAASB acknowledged Assurance services as an evolving field and, accordingly, decided that the IAASB should keep practical implementation of ISAE 3000 under review. Since its issuance in 2003, practitioners and national standard setters have gained considerable experience with ISAE.

7 3000 . That experience had identified a number of opportunities for revising ISAE 3000 to clarify how some of the core underlying concepts should be applied in practice. The IAASB commenced the project to revise ISAE 3000 in March 2009, in accordance with its commitment in its Strategy and Work Program, 2009 2011. Significant Matters Nature and Extent of Requirements The IAASB's intention is for proposed ISAE 3000 to be a principles-based standard that is capable of being applied effectively to a broad range of underlying subject matters, and that will provide a basis for current and future subject-specific ISAEs. In determining the nature and extent of requirements to include in the proposed ISAE, all requirements in the Clarified ISAs were reviewed to determine whether an equivalent requirement, adapted as appropriate, should be reflected in the proposed revised ISAE.

8 The IAASB acknowledged that inclusion of general requirements covering all significant areas of any Assurance Engagements Other than audits or reviews of historical financial information would avoid the need for them to be included in topic- specific ISAEs and therefore unnecessary duplication of requirements across various ISAEs. It also acknowledged that doing so may also assist in the harmonization of practices around the world and improve the consistency and comparability of Engagements undertaken in reference to ISAE 3000 alone. At the same time, the IAASB recognized that ISAE 3000 should not be so unwieldy as to be impracticable or inappropriate to apply in light of the broad range of Engagements and circumstances that it covers. Equally, the ISAE should facilitate innovation in the evolving field of Assurance , not act as an impediment.

9 Proposed ISAE 3000 reflects those requirements that, in the IAASB's view, enable consistent high quality Engagements while being sufficiently flexible to apply to the broad range of relevant Engagements . 4. EXPLANATORY MEMORANDUM. Levels of Assurance Consistent with extant ISAE 3000 , proposed ISAE 3000 recognizes that two levels of Assurance are possible for Engagements : reasonable Assurance and limited Assurance . Definitions for reasonable and limited Assurance Engagements are set out in paragraph 8(a)(i) of the proposed standard. Like extant ISAE, the proposed definition of limited Assurance explains its relationship to reasonable Assurance . In particular, it explains that a limited Assurance engagement is one in which the practitioner reduces engagement risk to a level that is acceptable in the circumstances of the engagement but where that risk is greater than for a reasonable Assurance engagement .

10 Accordingly, the set of procedures performed in a limited Assurance engagement is limited compared with that necessary in a reasonable Assurance engagement . The proposed definition of a limited Assurance engagement , however, also explains that in such Engagements the set of procedures performed is planned to obtain a level of Assurance that is, in the practitioner's professional judgment, meaningful to the intended users. The IAASB believes it is important to indicate a threshold level of Assurance for limited Assurance Engagements , with that being made in reference to the intended users. Importantly, proposed ISAE 3000 introduces additional guidance indicating factors that are relevant to the practitioner's consideration, including recognizing that the level of Assurance the practitioner plans is not ordinarily susceptible to quantification (see paragraph A2).