To aid in preparing a submission to the International Auditing and Assurance Standards Board (IAASB), the Auditing and Assurance Standards Board (AUASB) has invited the practitioners and stakeholders to give comments on the IAASB Exposure Draft on the proposed ISAE (International Standard on Assurance Engagements) 3420 ‘Assurance Reports on the Process to Compile Pro Forma Financial Information Included in a Prospectus’.

The proposed Standard deals with the practitioner’s responsibilities in a reasonable assurance engagement to report on the process applied by an issuer’s management to compile pro forma financial information for inclusion in the issuer’s prospectus.

The move comes in response to what the IAASB describes as an increasingly integrated nature of global capital markets which has given rise to greater opportunities for issuers to raise capital, and investors to invest capital, on an international rather than a local basis. The IAASB states that a clear need has arisen for common assurance standards throughout the European Union (EU) in relation to pro forma financial information included in a prospectus and that representatives from jurisdictions outside the EU, such as Brazil, China (mainland), Hong Kong, Singapore and South Africa, have also highlighted to the IAASB the need for common standards of reporting in relation to such financial information that can be consistently applied internationally.

The IAASB hopes that the proposed ISAE will assist market practice converge around the world by establishing concise, globally accepted benchmarks for practitioners to undertake engagements within the scope of the proposed standard. It also states that a common international standard will assist in eliminating the confusion and lack of clarity that currently exist because of the diversity of practice in different jurisdictions.

To view the entire draft visit the AUASB website at www.auasb.gov.au.