Benefits derived from International Auditing Standards
International Standards on Auditing (ISAs) are professional standards that deal with the independent auditor’s responsibilities when conducting an audit of financial statements. The rapid growth of global markets has put renewed emphasis on the development of and need for international standards on auditing. As the world continues to become smaller and international investment more and more frequent, the use of a common set of international standards presents clear benefits to investors, regulators, and audit firms.
Few major investors confine their activities within the borders of their own countries. As they seek to evaluate investment opportunities and monitor the performance of a global portfolio, investors will benefit from having access to financial information that has been prepared in accordance with international standards. They will have a better understanding of and more confidence in the financial information of the companies in which they have invested in the financial information they are reviewing is prepared and audited using common international standards.
For international regulators, the advantages are similar to those for investors it is easier to accept that foreign issuers are meeting the necessary standards if those standards are being used for domestic purposes as well as for international ones. In addition, a regulator enforcing international standards at home may find it easier to persuade a foreign regulator to rely on the home regulator’s work.
For Audit Firms
For the international auditing firms, the advantages are efficiency associated with applying a common audit approach and knowing that it complies with relevant standards. There are benefits to other audit firms as well. For example, if auditors have clients with overseas subsidiaries, the process of instructing overseas auditors and relying on their work will be facilitated if the usual standards, which are applied locally, are the same as those of the parent auditor. Similar advantages will be clear where the auditor is dealing with a subsidiary of a group audit.