IFAC's tips for cost-effective ISAs applications

In view of the introduction of the Clarified International Auditing Standards (ISAs), this in the UK will apply in respect of the audit of financial statements ending on or after 15 December 2010, the IFAC Small and Medium Practices (SMPs) Committee has published guidance to help SMPs apply ISAs in a cost-effective manner. 

The IFAC recognises that SMPs sometimes do not apply the risk-based auditing approach in an effective manner and that some may be doing more work than is needed and focusing work in the wrong areas when auditing small and medium-sized entities (SMEs).

As well as suggesting tips on how to apply the ISAs, the guidance references a range of materials produced by IFAC to assist with implementing the ISAs, all of which can be downloaded free of charge from the IFAC website.

In particular the International Auditing and Assurance Standards Board’s (IAASB) questions and answers document ‘applying ISAs proportionately with the size and complexity of an entity’ is of particular relevance to SMPs as it focuses on matters that relate to the application of ISAs in the context of a SME audit.