ISA

Also known as: International Standards on Auditing

framework · accounting · regulatory-standard

IAASB's international auditing standards used in over 130 jurisdictions globally.

International Standards on Auditing are issued by the International Auditing and Assurance Standards Board (IAASB) under the International Federation of Accountants (IFAC). ISA covers audits of historical financial information and is structurally parallel to PCAOB AS and AICPA GAAS. The IAASB was preceded by the International Auditing Practices Committee (IAPC), which issued international audit guidelines from the late 1970s; the IAPC was renamed and reconstituted as IAASB in 2002, with subsequent independent oversight by the Public Interest Oversight Board. ISA is used as the audit-standard basis in the EU (under the 2014 Audit Directive and Regulation), the UK, Australia, Canada, and 130-plus other jurisdictions. The ISA Clarity Project (2004-2009) produced redrafted standards in a structured 'requirements and application material' format that the AICPA's GAAS Clarity Project then adopted.

Originators

International Auditing Practices Committee (1977-2002); International Auditing and Assurance Standards Board (2002 onward, under IFAC) high

Year / Decade

1977 (IAPC founded); early 1980s (first International Auditing Guidelines); 2002 (IAASB); 2004-2009 (Clarity Project) high

Primary sources

IAASB. International Standards on Auditing (continuously updated, current Handbook), IAASB (2009). Clarified ISAs (effective for audits of financial statements for periods beginning on or after 15 December 2009), European Commission (2010). Green Paper: Audit Policy: Lessons from the Crisis high

Core components

ISA 100-999 — Standards on auditing of historical financial information
Quality Management standards (ISQM 1 and 2, replacing ISQC 1 from 2022)
Standards on Review Engagements (ISRE), Assurance Engagements other than audits or reviews (ISAE), and Related Services (ISRS)
Clarity Project format: separately presented requirements and application material
Risk-based auditing framework (ISA 315, 330)
Auditor reporting (ISA 700 series, with KAMs in ISA 701)

Primary use case

Statutory audits in EU member states, UK, Australia, Canada, and most non-US jurisdictions; basis for cross-border audit work and component-auditor coordination by global audit networks; reference for IFAC-member-body national auditing standards (often adopted with limited modification); foundation for the AICPA GAAS Clarity Project recodification.

Common criticisms

ISA's effectiveness depends on national-level adoption and enforcement, both of which vary widely — the same nominal ISA compliance produces different audit quality in different jurisdictions, an empirical finding highlighted by the European Commission's 2010 Green Paper on audit policy
the IAASB's governance through IFAC, the trade body of accounting professional associations, has long raised independence concerns despite the Public Interest Oversight Board's creation, with continuing calls for fully public-sector standard-setting
key audit matters (ISA 701) have produced limited evidence of improved investor decision-making, paralleling PCAOB CAM critiques
cross-jurisdictional consistency of professional skepticism, materiality, and group audit (ISA 600) application has been a continuing IAASB concern
large audit firm dominance of standard-setting input gives rise to capture concerns
the audit expectation gap (financial statement reliance vs detection of fraud) is structurally similar to the GAAS problem and not fully addressed by ISA reforms after EU collapses such as Wirecard, NMC Health, and Patisserie Valerie.

Lineage

Siblings: GAAS, PCAOB Auditing Standards, Yellow Book