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In March 2009, the IAASB completed its Clarity Project and released its full set of 36 clarified ISAs and the clarified International Standard on Quality Control (ISQC). The Clarity Project involved a comprehensive review of all the ISAs and ISQC to improve their clarity and, thereby, their consistent application. As part of the Clarity Project, the ISAs have also been enhanced relative to the general approach to the audit, to instill a focus on objectives, promote a thinking audit, and emphasize the importance of professional skepticism; and to focus on aspects of financial statements that generally have a higher risk of material misstatement in virtually all audits, for example, estimates and fair values, related parties, and use of service organizations. In addition, the ISAs include enhancements regarding:

  • Quality of audit evidence;
  • Using the work of others, to ensure that auditors are satisfied that there is an appropriate basis on which to rely on the work of others, and to rely on others only when it is appropriate to do so; and
  • Auditor communications and reporting, to emphasize the importance of open and constructive dialogue between auditors and those charged with governance/management, and to help ensure that important matters are brought to users' attention in a clear and meaningful way.

Each ISA is structured in separate sections:

  • Introduction: Introductory material may include the purpose, scope, and subject matter of the ISA, in addition to the responsibilities of the auditor and others in the context in which the ISA is set.
  • Objective: Each ISA contains a clear statement of the objective of the auditor in the audit area addressed by that ISA.
  • Definitions: For greater understanding of the ISAs, applicable terms are defined in each ISA.
  • Requirements: Each objective is supported by clearly stated requirements. Requirements are always expressed by the phrase "the auditor shall."
  • Application and other explanatory material: The application and other explanatory material explains more precisely what a requirement means or is intended to cover, or includes examples of procedures that may be appropriate under given circumstances.

The clarified ISAs became effective for audits of financial statements for periods beginning on or after December 15, 2009. The latest version of the Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements was published December 2015.

Assessment Methodology

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As part of the Reports on the Observance of Standards and Codes (ROSC) initiative, the World Bank established a program in 2008 to assist its member countries with the implementation of international accounting and auditing standards for strengthening the financial reporting regime. The objectives of this program are two-fold:

  • Analyze comparability of national accounting and auditing standards with international standards, determine the degree with which applicable accounting and auditing standards are complied, and assess strengths and weaknesses of the institutional framework in supporting high-quality financial reporting.
  • Assist the country in developing and implementing a country action plan for improving institutional capacity with a view to strengthening the country's corporate financial reporting regime.