Professional standards issued by the International Auditing and Assurance Standards Board (IAASB) for auditors to follow when conducting audits of financial statements. These standards guide the auditor’s responsibilities, objectives, and the required procedures throughout the audit process. Key points about ISAs:
- Objective: The primary objective of ISAs is to ensure high-quality, consistent, and effective audits globally, thereby enhancing the credibility and reliability of financial reporting.
- Scope: ISAs cover various aspects of the audit process, including planning, risk assessment, internal control testing, audit evidence, using others’ work, forming opinions, and reporting.
- Structure: ISAs include an introduction, objective, definitions, requirements, application, and other explanatory material for each standard.
- Principles-based: ISAs are principles-based standards, providing a framework for auditors to exercise professional judgment and maintain professional skepticism throughout the audit process.
- Adoption: Many countries have adopted ISAs directly or used them to develop their national auditing standards. This promotes international harmonization and comparability of audited financial statements.
Notable ISA Standards
- ISA 200: Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing
- ISA 315: Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment
- ISA 330: The Auditor’s Responses to Assessed Risks
- ISA 700: Forming an Opinion and Reporting on Financial Statements
ISAs are designed to be applied in audits of entities of all sizes, complexities, and sectors. They are regularly reviewed and updated by the IAASB to address emerging issues, changes in the business environment, and stakeholder expectations, ensuring that the standards remain relevant and effective in promoting audit quality.
Additional Acronyms for ISA
- ISA - Instruction Set Architecture