Overview - Financial Audit Guidelines

The INTOSAI Financial Audit Guidelines will be based on the International Standards on Auditing (ISA) issued by the IAASB. INTOSAI has been represented in IAASB Task Forces since 2004 and therefore directly involved in the work with developing standards for audit. INTOSAI acknowledge that there is a need besides the public sector issues covered by the ISAs to provide public sector guidance beyond the scope of an ISA. Therefore it was decided to develop Practice Notes (PN) to all ISAs if considered needed by the INTOSAI experts. The ISAs together with the PN will form a guidance within the INTOSAI, thus constituting the fourth level in the hierarchy of standards within the INTOSAI.

In addition to the ISA and PN the Subcommittee has identified some areas outside the scope of the ISAs where there is a need to provide guidance specific to the public sector. Separate guidance will be developed by the experts assisting the Subcommittee in developing the guidelines.

One important area identified as beyond the scope of ISAs is public sector audit and reporting requirements relating to compliance with regulations. In order to address this issue the Financial Audit Guidelines Subcommittee has a close cooperation with the Compliance Audit Subcommittee. The purpose is to include the compliance audit guidance, developed by the Compliance Audit Subcommittee, related to financial audit in the Financial Audit Guidelines.

Scope of the guidelines

The scope of the guidelines has been decided as “The Financial Audit Guidelines will provide public sector guidance for audits of Financial Statements including mandated additional audit and reporting requirements related to the audit of Financial Statements.”

This means that besides the audit of financial statements aiming to provide an opinion on the financial statements, the financial audit guidance will also provide the public sector auditor with relevant guidance for additional auditing and reporting requirements if and only if related to the audit of the financial statements. Mandated requirements on compliance audit with an opinion issued as part of the ordinary auditors report and opinion will be regarded as related. Even a separate opinion can be regarded as related if the opinion on compliance will be issued on financial statements prepared using a financial reporting framework which acknowledge that following the framework constitutes compliance with the regulations.

Some SAIs may have organized the work in a way that additional requirements have been placed on financial auditors. This has not been considered when developing the Financial Audit Guidelines.

Publication and translation

All guidance developed will be translated and issued in the official INTOSAI languages. Exposure drafts will however only be issued in English. A PN is very tightly connected to an ISA and that ISA is only issued in English by the IAASB. Translation of ISAs is governed by a translation policy, but the translation as such is not the responsibility of the IAASB.

Implementation

The guidance will be issued on the website after approval of the Governing Board. The guidance can be used after approval, but will be endorsed by INCOSAI (the International Congress of Supreme Audit Institutions) every three years (2007, 2010, 2013 etc).

The Subcommittee is not responsible for the implementation within INTOSAI. The issue on implementation will be addressed later on.

The Financial Audit Guidelines will have the following sections:

General Introduction and background to INTOSAI Financial Audit Guidelines.

General considerations for the public sector, relating to the application of ISAs.

A bridge, linking the INTOSAI Auditing standards with the International Standards on Auditing (ISA) issued by IAASB.

Practice Notes, issued to each ISA, prepared by the Subcommittee on Financial Audit Guidelines.

ISAs, issued by the IAASB, with public sector considerations contributed by a reference panel expert.

Additional guidance on specific public sector audit issues beyond the ISAs.

(23-04-2007)