In the course of the last years, globalization of capital markets has triggered an intensive discussion about harmonization of accounting. This is why I want to talk about a current issue: the implementation of the International Standards on Auditing in the European Union and Germany.
A pivotal question is about the functional policies according to which annual audits are to be performed in the future. The harmonization of external accounting shows that auditing standards for annual audits of enterprises also need to be harmonized, in other words, consistent international auditing standards are required. Because of this development, international regulators and market actors increasingly demand a consistent auditing language and the European Union discusses the adoption of the International Standards on Auditing (ISA).The ISA are among the most significant international publications regarding the internationalization of statutory balance sheet audit. If annual auditors want to stay international competitive, they have to deal with ISA. The ISA are published by the International Federation of Accountants (IFAC) and being developed by the International Auditing and Assurance Standards Board (IAASB).
The Institution of Accountants in Germany (IDW) will concentrate on the implementation of ISA over the next few years. The IDW Auditing Standards have been adapted to the ISA several times and have been on the same level as the ISA for a while. Until 2004, all ISA had been adapted to German auditing standards, if no national regulation was opposed.
To validate the ISA in the whole European Union, the 8th EU Directive was published on June 9, 2006 to facilitate the transformation of the ISA. Please also check out http://www.ariscommunity.com/users/elba/2010-11-05-loungetalk-euro-sox-what-does-it-mean)
After the Bilanzrechtsmodernisierungsgesetz (BilMoG), paragraph 317 articles (5) and (6) of German Comercial Code include the adjustment to adopt the ISA directly. But the EU does not apply the ISA officially yet. The adoption of the ISA by the European Union is necessary, but the European Union has not defined a definite date for adoption of the ISA yet.
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