The delta - Mind the gap

The final adoption of the ISAs into the Belgian Auditing
Standards in 2010 caused additional requirements
to be applicable for the auditor for statutory audits of
financial statements for years ending as from 15 December
2012 (PIEs) and ending as from 15 December
2014 (all other entities). In the analysis presented
in this article, a detailed overview is presented of the
differences between Belgian GAAS and the Clarity
ISAs.
The case study results in the finding that 33% of the
ISA requirements are not part of Belgian GAAS. When
looking into the details of the requirements, it appears
that a very small number of these differences are attributed
to the fact that some of the ISA requirements
are not relevant to the statutory audit of financial
statements. In our opinion, the following differences,
constituting the most important ‘delta’ between Belgian
GAAS and ISAs, are considered to have an impact
on the quality of the audit of financial statements:
– More emphasis on the use of professional scepticism
by members of the audit team, e.g. in discussing
the susceptibility of the financial statements for
misstatement due to fraud (in particular the ISAs
200, 315 and 240);
– Fully-fledged risk assessment, including the iden
identification
of significant risks (in particular the ISAs
315, 240, 540 and 550);
– A more detailed audit plan including references to
all relevant assertions of account balances, classes
of transactions and disclosures (in particular ISA
315), emphasizing the involvement a more senior
members of the audit team in planning the audit;
– Additional audit procedures to be performed independently
of the auditor’s risk assessment;
– Further audit procedures directed at responding to
significant risks (in particular the ISAs 330, 240,
540 and 550);
– An extensive number of communication requirements
for the auditor in order to inform the entity’s
management and those charged with the entity’s
governance (e.g. the audit committee) appropriately
(in particular the ISAs 260 and 265);
– More detailed audit documentation demonstrating
the auditor’s thought processes and contributing to
the understanding of the ‘fil rouge’ (strategy/planning)
followed during the audit in compliance with
the applicable ISA requirements.
Some of the differences between the two sets of auditing
standards do not come as a surprise, as the following
ISAs have never been transposed into Belgian
GAAS between 1977 and 2007: ISAs 260 (communication)
17, 402 (service organization), 510 (initial audit),
and 710 (Comparatives). Furthermore, the Clarity
project of the ISAs (finalized in 2009) initiated additional
modification to the (pre-clarity) ISAs on which
Belgian GAAS is based.
All of the differences discussed in the context of this
article may serve a purpose:
– For an auditor or an audit firm (registered in Belgium)
to follow/provide relevant ISA training seminars,
in the context of the continued professional
training programs18;
– For an audit firm to develop and update its methodology
manual or sets of instructions, if not yet
done;
– For any university student preparing a thesis related
to a subject matter dealt with by the ISAs;
– For any doctoral student intended to perform research
on the differences in practice (‘de facto’
analysis) between applying ISAs vs. the Belgian
auditing standards, e.g. in the context of a Small
and Medium-sized Entity (SME), taking into account
the practical approaches dealt with by an
audit firm in respect of the ‘scalability’ when applying
audit procedures.
Last but not least, paragraph 19 of ISA 200 requires
the auditor to have an understanding of the ISAs in
order to understand its objectives and apply all relevant
requirements properly. This requirement is not
incorporated, mutatis mutandis, into the Belgian Auditing
Standards. The objective of this article is to provide
a better understanding of the requirements forming
the “delta” between Belgian GAAS and the ISAs.

Jaar van publicatie:2014

Trefwoorden:Auditing standards, Audit, ISA, harmonization, GAAS, standard setter

Toegankelijkheid:Closed