The concept of understanding an entity’s business model, including how it uses Information Technology (IT) is new in ISA 315 (Revised 2019).

Understanding the business model sounds like child’s play, but in the context of exploring inherent risks, it presents a powerful tool to understand the entity.

Paragraph 19(a)(i) tells us that: The auditor shall perform risk assessment procedures to obtain an understanding of… The entity’s organisational structure, ownership and governance, and its business model, including the extent to which the business model integrates the use of IT.

Paragraph A61 explains why this is necessary.

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In the post-pandemic era, accounting professionals will need to transform their skill set, with new tools and a new way of thinking about client service

As the pandemic and what comes after continues to transform the accounting profession, CPAs need a new mindset, skill set, and tool set to thrive, says Tom Hood, executive vice president of the Association of International Certified Professional Accountants (AICPA).

Hood recently spoke with the Thomson Reuters Institute about the future of the accounting profession in the post-pandemic era — a theme he addressed in a presentation at AICPA’s recent 2021 ENGAGE conference and in a whitepaper and course from the Business Learning Institute.

When the COVID-19 pandemic shut down the global economy in early 2020, accountants were deemed essential workers because of their important role in sustaining business operations, tax collection, and the overall economy, Hood notes. In the months that followed, many accounting firms helped their business clients navigate unprecedented business challenges and leverage federal relief packages, including the Paycheck Protection Program and Economic Injury Disaster Loan program.

“CPAs had to immediately shift from preparing taxes to consulting on these things,” Hood says. “Through that period until now, $7 trillion went through accounting, tax, and payroll systems, because those systems administered the relief. That’s why the profession was declared essential.”

Tom Hood, executive VP of AICPA

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by David Edgerton APV

Introduction
With the recent publication of IPSASBs new standards on Infrastructure and Measurement, it is appropriate to summarise the key changes from the old IPSAS17 Property Plant and Equipment and reflect on how the new IPSAS requirements differ from the existing IFRS valuation requirements. While there is a conceptual difference with IPSAS being an ‘entity specific entry price’ and IFRS being an ‘exit price at highest and best use’, in reality, almost of all of the requirements once the replacement cost of market value is determined are the same. This includes disclosures and the calculation of depreciation expense. read more Full PDF article >>

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By David Edgerton APV

Historical Inconsistencies
Since the implementation of accrual accounting in the public sector there has been significant inconsistencies regarding the interpretation and association application of a range of valuation related aspects of the IFRS and IPSAS standards.
For example, in Australia, over the past 20 years the level of inconsistency has been exacerbated as a number of jurisdictions mandating the revaluation model for the first time and issuing guidance which was not consistent with practices adopted in other jurisdictions or jurisdictions had not updated their guidance despite significant changes in the accounting standards. read more Full PDF Article>>

Pacific Island Countries
Depending on whether and entity is a government department or agency or government owned enterprise, some pacific island countries adopt the IFRS standards (as done in Australia across all sectors) while others follow the IPSAS standards. read more Full PDF Article>>

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WHAT IS THE ISSUE HERE?

When a casual reader reads an audit report they expect to see a phrase that says something like “true and fair” or the more recent “fairly presented”. These are the words that indicate a “clean” report – so no need to read all the other boring detail!

The problem is – what about if those words are missing? What if the report just says “In our opinion, the accompanying financial statements of Client X Limited for the year ended xxxxx are prepared, in all material respects in accordance with the accounting policies stated in Note X,” [or whatever might be appropriate] And that’s it? Nothing about true and fair or fairly presented?

The wording above is what we are required to use in terms of ISA (NZ) 800 (revised) Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks if we are auditing certain kinds of financial statements. For example Illustration 2 from that standard: This really applies to the audit of special purpose report which are no General Purpose Financial Reporting (GPFRS).

APPLICATION TO SAMOA.

Very applicable to the audit of Projects which requires a hybrid approach ie partial agreed upon procedures and usual audit reporting requirements. With the introduction of the $1m Constituency Funding from Samoa Government to all the Constituents in Samoa. Obviously, 0n the face of the “”District Council Establishment Fund Guidelines”, auditors at a glance will assume the engagement as an Agreed Upon Procedures (AUP).

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