Auditing in the IFRS Era

by Laura Hilby and Kacie Woodley
Faculty advisor: Dr. Sue Cullers

The Norwalk Agreement of 2002 set forth a plan of convergence between the International Financial Reporting Standards and United States Generally Accepting Accounting Principles. Because of this convergence, the way that a company’s financial statements are reviewed and audited must also change. This change has led to the accounting profession undertaking a project of convergence between the Auditing Standards Board Statements on Auditing Standards and the International Audit & Assurance Standards Board International Standards on Auditing.

One of the major undertakings has been the Clarity Project. The goal of this project is to make the SASs easier to read, understand, and apply and to lead to convergence. The Clarity Project will eventually lead to the merger of ISA standards with current US GAAS and adding other requirements for US companies when needed. Major differences must still be resolved before the United States is ready to unveil the newest of its auditing standards. How will the practice of financial statement auditing be affected with the convergence of Generally Accepted Accounting Principles to International Financial Reporting Standards?