IAASB issues new assurance standard on controls at service organizations
06 January 2010
This new standard sets a global benchmark for reporting on controls at service organizations, thereby helping to fulfil the needs of those who use such services and their auditors under International Standards on Auditing (ISAs).
This International Standard on Assurance Engagements (ISAE) deals with assurance engagements undertaken by a professional accountant in public practice. These provide reports for use by user entities and their auditors on the controls at service organizations providing services to user entities that are likely to be relevant to user entities’ internal control because they relate to financial reporting.
The objective of this new standard is to obtain reasonable assurance about whether, in all material respects, based on suitable criteria:
(i) The service organization’s description of its system fairly presents the system as designed and implemented throughout the specified period (or, in the case of a type 1 report, as at a specified date);
(ii) The controls related to the control objectives stated in the service organization’s description of its system were suitably designed throughout the specified period (or, in the case of a type 1 report, as at a specified date);
(iii) Where included in the scope of the engagement, the controls operated effectively to provide reasonable assurance that the control objectives stated in the service organization’s description of its system were achieved throughout the specified period.
This new standard addresses reports on the description, design and operating effectiveness of controls relating to the broad range of services provided by today's service organizations. Such services range from assisting with processing transactions to performing one or more business functions.
"A single service provided by a service organization can have direct relevance to the quality of financial reports prepared by entities around the globe. Effective controls for delivering the service are therefore essential," said Arnold Schilder, IAASB Chair, adding, "This new standard sets a global benchmark for reporting on controls at a service organization, thereby helping to fulfil the needs of those who use such services and their auditors under International Standards on Auditing (ISAs)."
© IAASB - International Auditing and Assurance Standards Board
