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The International Auditing and Assurance Standards Board (IAASB) is a function of standard setting body by the International Federation of Accountants (IFAC). IAASB is to establish high quality auditing, assurance, quality control and related services standards and to improve the uniformity of practice by professional (ACCA, 2007, pp. 76-79)
In order to serve the public interest, IFAC will continue to strengthen the accounting profession in the world and contribute to the development of strong international economy by establishing and promoting adherence to high quality of professional standards, to promote international convergence of such standards, speak out to the public interest where the profession voice is most relevant (Kellas, J, IAASB Chairman, 2005) [Online]
To achieve this mission, the IFAC Board has established IAASB as an independent standard setting under the auspices of the IFAC and subject by the Public Interest Oversight Board (PIOB) The objective of IAASB is to development of high quality assurance standard and quality audit through the promotion of international and national standard, thereby promoting the quality and practices throughout the world and strengthening public confidence in the global auditing and assurance profession as one element of that oversight, establishes its due process and working procedures. ). (IFAC, 2008)
The IAASB has focus on high-quality international auditing standards (ISAs) are accepted by the global major changes in favor convergence. This audit approach included a risk assessment and concerns of accounting fraud and excessive reaction of the development such as the fair value of the greater use of financial reports. Besides, concern on the regulator and development, therefore, the practitioners are easier to understand the standards and the requirements of employees, which is to bring the project to improve the clarity of IASs. (IFAC, 2007) [Online]
2.0 Positive Impacts of Convergence
Auditors use auditing standards to conceal when have an incorrectly statement or go wrong. Therefore, auditing standards is very specific about what the requirement for an auditor is required to do. Auditing standard also should be a stick with which to verify the wrong audit. ISAs may not deal with the small position and less complex entities on an adequate basis. However, the risk of ISAs in a particular are the development of the use of the best practices on behalf of large scale to regulatory bodies for issues of concern, which have obligation to provide best services but not the obligation to consider the needs of smaller or less complex entities. (AQF, 2006) [Online]
On other hand, sometimes there are unclear specific what are the meaning of the criteria mention by the auditing standard. Therefore, the acceptance of the core standard as part of overall framework together with the method of interprets the concept of auditing but not on the rules to enable the compilation of the financial statement.
IAASB considers its task is to take action on all the activities to guarantees that the public interest. The the most important content of IAASB work is to serve the public interest that for many survey respondents felt that strategic focus areas and that the public interest in the proxy IAASB should be a transparent manner by following due process and with its members are seen as independent. (Healy, K, James, B, 2010)
Furthermore, The IAASB required transparency in its activities and its international statements are based on the development of its due process and working procedures have been approval by PIOB. Before the final conclusion can be issued, PIOB will proper consideration whether followed proper procedures to assess or with the proper regard for the public interest. (Healy, K, James, B, 2010) [Online]
The IAASB also recognized that the regulators, accounting standard setters and the others in the implementation of the global financial crisis. Therefore, it is important of IAASB actively participate in the international debate which to promote its views and timely response to any problems that may arise from the audit perspective.
In addition, the IAASB is currently in communication and outreach activities will also be continuing. Such as, in the enhancement promote adoption of the classify of ISAs and sharing the ISSAB view and possible applications through certain circumstances, the public sector auditors and others to obtain feedback on the challenges of implementing an appropriate location in order to respond to more direct interaction with investors and other stakeholders into the IAASB's standard setting procedures. (Healy, K, James, B, 2010)
From the customer point of view, the new standard may be an advantage because it can serve as a good opportunity to stand back and take in the re-examine areas such as the recording system that is internal controls and industry, to see if there is any chance or a threat on the horizon (Pierce, D, 2005) [Online]
3.0 Negative Impacts of Convergence
Auditing standard has provided a benchmark which measures the quality of audit work. Therefore, this may be useful to monitoring body which is considering whether a particular audit firm is subject to disciplinary sanction. If the audit firm does not meet the standard in the audit work, there would be a high probability chance of the work failing below what the profession regard of acceptance. (Gray, Manson, 2007, p.119)
The adoption and implement of international standards in country may effect by some environment factors of the country, such as, economic, political, legal, regulatory and cultural. One reason it was mentioned that is not fully incorporated for the international financial reporting standards and international audit is considered necessary to amend the State to international standards for the country specificities
It is important to note that the IFAC and the IAASB have said that, although the ISAs for the physical design of all sizes but this cannot mean that every ISAs audit is performed at the similar way. For instances, an audit methods may be different but on the basis of auditing standards, it is the level of assurance and audit staff must first obtain and should not be. Because of the international auditing standards based structures, the specific audit procedures to the objectives and actions for compliance with the requirements may be different in a small and simple compared to the audit of entities with very large. (FEE, 2009) [Online]
In addition, auditor should follow with the requirement of the ISAs unless the entire ISAs is not relevant and the request is not relevant because of the conditional not exist. In certain circumstances, auditors may deviate from the requirements in an ISA and records through the implementation with alternative audit procedures. (FEE, 2009) [Online]
In some cases, participants had reported that their countries have adopted international standard release criteria in a specific date, but they did not keep up with the latest new and revised international standard to that date. Besides that, they are different national standards would have different effective of dates that they are based on the transitional provisions of international standards. (Wong, P, 2003)
4.0 How harmonization may impact the auditing profession in Malaysia
â€œThe Malaysian government in 1967 has initiated to establish the Malaysian Institute of Accountants (MIA) under the Accountants Act 1967 with the intention to regulate and control the practice.â€ (Muhamad Sori , Z, Mohamad, S, 2008) [Online] The MIA through the Accountants Act 1967 has required all persons to register with the Malaysian Institute of Accountants (MIA) before they can be a certified public accountant or an auditor through strict code of ethics and professional standards of the constraints. (Muhamad Sori , Z, Mohamad, S, 2008)
Accountants and auditors are members of professional bodies are subject to ethical requirement imposed by those bodies. The rules and regulation of the professional bodies included wide ranges of system designed to protect and promote the public interest against the personal acts of self interest. Therefore, it encourages memberâ€™s bodies to adopt high standard of ethics for their member and promotes good ethical practices globally.
Professional accountant should comply with the relevant laws and regulations, and refrain from any action likely to discredit the professional. However, an external auditor provide non-assurance services, sometimes may created some threat by the provision of such services. Therefore, it may eliminate or reduce the threat by application of safeguards to an acceptable level. Auditor should be professional to use the best condition during the auditing.
The practice of provide professional services, especially financial audit, experience tremendous changes have taken place in recently. The professional standard has increasingly more stringent requirements of on the practitioners. Continuous upward grade skills and expertise have become a routine declaration insisted. Besides, reasonable pay level will encourage practitioners to maintain and upgrade the quality of services. (MIA, 2007) [Online]
Competition has been identified as the most important environmental changes and external factors that affect auditor independence. Most of the Enterprises in a highly competitive operating environment may be difficult to remain independent because of the customers can easily access the services of another auditor. In addition, The regulatory role is to ensure all members comply with professional ethical standards and fulfill their professional responsibilities and shown by all members to ensure professionalism, competence and integrity of the highest standards of expected of profession (Abu Bakar, N, 2009)
5.0 how other regulations may also contribute to strengthen the auditing profession?
Each profession is defined by the attitudes, knowledge, skills and ethics in the industry. A profession regulation is a specific response to the need for some standards to meet by the members of the industry. The nature of such legislation and is the need for specific profession and markets which it operates.
Most counties have their national bodies audited the profession regulator to ensure the professional standards and ethical behavior and national institutions of the auditors. The qualification of audit today was awarded the qualification review and control at the national level. However, as the development to move forward, the global regulatory might come on stronger and the national audit education fields will be exposed to new forces, therefore may have a long-term radical effects. State regulatory agencies may need to remain competitive and control that they must maintain their relative's capital, if a new framework is pursuit. (Paul,D, Nicoleta,C, et.al, 2009) [Online]
The debate on the coordination of audit qualifications have become intertwined, mutual recognition which involves the possibility of qualified auditors practicing rather than they are registered as and other possibilities. Recognized the qualifications of auditor from other countries that the eligibility of the auditor is crucial to establish clear audit services which are put forward as a free market in the coordination of the audit and also making more reliable financial report. (Paul,D, Nicoleta,C, et.al, 2009) [Online]
As the development of regulations and penalties for non-compliance has become focused, therefore, to avoid regulatory sanctions, review and delay is now the key to survival. An audit is conduct by a professional who are understand the worldwide regulatory requirement, using the high quality standard and review for regulatory compliance. External auditors are to classify the seriousness of the audit, defect weaknesses in the accounting records and provide services with a clear path to resolve the defect.
Revision of auditing standard is a great step forward for the development of truly international auditing standards. The movement of the previous version standard should be revised to recognize the special needs of auditing in performance and policies or provides analyses. Auditing standards do not have strong application to reflect a best practices consensus with the judges. Therefore, audit standard must extent to which the standards are compatible with the achievement of its mission
The implementation of resources may involve in all aspect of the review, audit services should agree on the proposal to examine the issues before the final audit report. Therefore, will be carried out or use of existing resources or additional resources can be easy appeal to the audit
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