Q: Our auditors tell us that there are new auditing standards that will impact on our audit. What is this all about?
A: On 17 December last year, the Auditing Practices Board published 30 new International Standards on Auditing (UK & Ireland), or ISA pluses, which replaced existing UK Auditing Standards (SASs). The ISA pluses only come into force for audits of accounting periods commencing on or after 15 December 2004.
The 'plus' elements incorporate parts of previous UK SASs where these are not covered by the existing ISA. Guidance on the application of the existing SASs for charity auditors is found in Auditing Practice Note 11. In the long term, the APB will update APN11, but as a short-term measure it published Bulletin 2005/1, Audit Risk and Fraud - Supplementary Guidance for Auditors of Charities.
In many cases certain audit procedures and testing become mandatory and there is an even greater focus on testing controls. The changes required by these standards have not yet received much publicity, and change and cost implications are likely. In February, the Institute of Chartered Accountants in England & Wales published Auditing Standards - All Change!
A Short Guide to Selected International Standards on Auditing (UK and Ireland). This says: "Audit engagement partners are encouraged to communicate the extent and nature of changes in their audit processes and procedures with those charged with governance and any increase in resources required to perform the audit in accordance with the new standards. Engagement partners also need to be satisfied that sufficient partners and staff have been assigned to meet these standards in full."
- Pesh Framjee is head of the non-profit unit at Deloitte and special adviser to the CFDG. No liability arises to the author, his firm or Third Sector. Send your questions to firstname.lastname@example.org.