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ACCA Strategic Professional · Advanced Audit and Assurance (International) · International regulatory frameworks for audit and assurance services

Zeta & Co, an audit firm, audits a listed company. The firm's managing partner says the firm is free to ignore the International Standards on Auditing because ISAs are issued by IAASB, which is not a government body. Which statement best describes the status of ISAs in a jurisdiction that has adopted them into law or professional rules?

Once a jurisdiction adopts ISAs through law or professional rules, they are mandatory for auditors there. Although IAASB is not a government body, adoption gives them authority, and failing to comply can lead to regulatory or disciplinary action, so the firm cannot ignore them.

  1. AISAs are only guidance and auditors may depart from them without consequence
  2. BISAs become mandatory for auditors in that jurisdiction, and non-compliance can lead to regulatory or disciplinary actionCorrect
  3. CISAs apply only to listed company audits, not to other entities
  4. DISAs apply only if the client's directors request that they be followed

Explanation

IAASB sets ISAs but their authority comes from adoption by national law or professional bodies. Once adopted, compliance is mandatory and breaches may attract sanctions. The idea that they are optional guidance is wrong because adoption makes them binding.

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