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Proposed revised and redrafted International Standard on Auditing issued for comment by the International Auditing and Assurance Standards Board of the International Federation of Accountants

Comments from ACCA
November 2007

Executive Summary

ACCA welcomes the opportunity to comment on the proposed International Standard on Auditing ISA 706 (Revised and Redrafted) Emphasis of Matter Paragraphs and Other Matter(s) Paragraphs in the Independent Auditor's Report (proposed ISA 706), issued for comment by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants.

Our comments are restricted to the changes proposed as a result of applying the Clarity project drafting conventions to the close off document of ISA 706 (Revised) that reflects IAASB decisions made after an earlier consultation.

We make several suggestions for improving the way proposed ISA 706 and proposed ISA 700 (Redrafted) The Independent Auditor's Report on General Purpose Financial Statements (proposed ISA 700) deal with requirements. These suggestions are intended to enable users to more readily deal with the whole range of matters that can affect the auditor's opinion on the financial statements and other aspects of the auditor's report.

Application of the Clarity Drafting Conventions

OBJECTIVE

The Objective is acceptable. It is lengthy, however, and may benefit from redrafting in a bulleted form consistent with proposed ISA 705 (Revised and Redrafted) Modifications to the Opinion in the Independent Auditor's Report (proposed ISA 705) , so as to commence: 'The objective of the auditor is to express clearly . . . ‘

There also appears to be a disparity between the Objective and the requirements for Other Matter(s): see our comments below on the Requirements.

INTRODUCTION

We suggest that the ‘sign-posting' material in the close off version of ISA 706 be reinstated so that the attention of users is directed to the role of ISA 705 Modifications to the Opinion in the Independent Auditor's Report . Proposed ISA 700 The Independent Auditor's Report on a Complete Set of General Purpose Financial Statements properly refers to ISA 705 and ISA 706, and this reference ought to be mirrored in those ISAs.

Definitions

Proposed ISA 706 has no Definitions section. Instead, wording in its Scope section in effect defines the terms ‘Emphasis of Matter' (paragraph) and ‘Other Matter(s)'. We suggest that such terms be properly defined and presented in accordance with the way definitions are treated in other ISAs. If not defined in proposed ISA 706, the terms also feature in proposed ISA 700 and could be defined there.

REQUIREMENTS