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A95065 1 (2011-06-06)

handle is hein.gao/gaobadvxv0001 and id is 1 raw text is: i ~GAO Acountabilny IIntegrity * Reliability United States Government Accountability Office Washington, DC 20548 June 6, 2011 Technical Director International Auditing and Assurance Standards Board 545 Fifth Avenue, 14th Floor New York, New York 10017 USA Subject: International Auditing and Assurance Standards Board's (IAASB) January 2011 Discussion Paper, The Evolving Nature of Financial Reporting: Disclosure and Its Audit Implications This letter provides the U.S. Government Accountability Office's (GAO) comments on the IAASB's January 2011 Discussion Paper entitled The Evolving Nature of Financial Reporting: Disclosure and Its Audit Implications. We support the Board's efforts to clarify the auditor's responsibilities related to auditing financial statement disclosures. Also, we support development of principle-based guidance, either as a standard or other guidance, for evaluating disclosures that builds on the existing requirements in the International Standards on Auditing (ISAs). Such guidance can improve the consistency and effectiveness of auditing disclosures. In developing such guidance, we suggest the Board consider developing or strengthening existing guidance in the following areas: * developing uniform criteria for evaluating disclosures, * providing additional guidance on evaluating qualitative disclosures, and * clarifying the extent of the auditor's responsibilities for auditing disclosures. Criteria for Evaluating Disclosures Currently, the criteria for evaluating disclosures are presented in multiple standards and the language used in explaining the criteria has subtle differences that could result in inconsistent application. Disclosure criteria discussed in various standards and summarized in the Discussion Paper include: * financial statements provide adequate disclosures to enable the intended users to understand the effect of material transactions and events on the information conveyed in the financial statements. (ISA 700) * disclosures of estimation uncertainty in the financial statements are in accordance with the requirements of the applicable financial reporting framework. (ISA 540)

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