09 September 2011

FEE commented on IAASB Exposure Draft on ISAE 3000

According to FEE, ISAE 3000 should act as a stand-alone overarching standard providing a solid basis for the broad range of assurance engagements under this standard as well as for engagements in accordance with the additional requirements that may be set in subject-specific standards. In this context, to prevent confusion as to the authority attached to ISAE 3000 and to the subject-specific standards, specific requirements, for instance with regard to assurance reports, should not contradict each other.

More explanation of the difference between direct and attestation engagements is needed, especially with regard to why there is a need to distinguish between the two engagement types and what the differences are for reasonable and limited assurance respectively, and with regard to the reporting.

Commonly-used terms, such as practitioner, engagement partner, errors, etc., should not differ from one engagement type to another without a clear justification for the difference. Consistency between standards should therefore be the key driver when setting new standards to facilitate appropriate application of the standards in a practical manner without risking misunderstandings of the terms used in the different engagements. 

Assurance reports need to be understandable. The general concept of a negative opinion in limited assurance engagements, regardless of the wording of the opinion, may be difficult to understand in practice and may not contribute, in the interest of the users, to close the expectation gap that already exists. However, FEE believes that limited assurance can probably be best conveyed through a negative opinion, as this makes the limited assurance opinion different from a reasonable assurance opinion in its appearance. The specific wording of the opinion should be made simple, clear and to the extent possible, use non-technical language. This can be achieved by avoiding double negative wording.

Given the variety of engagements that will be performed under this standard and to facilitate consistent application of the standard, skeleton example assurance reports should be included in the standard, in particular to illustrate the wording of the opinion in attestation and direct assurance engagements.

When issued, ISAE 3410 should be fully aligned with the new ISAE 3000, and the two standards should be issued simultaneously with the same effective dates.

Full paper

© FEE