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‘Clarity’ Begins at Home: An Examination of the Conceptual Underpinnings of the IAASB's Clarity Project
Author(s) -
Dennis Ian
Publication year - 2010
Publication title -
international journal of auditing
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.583
H-Index - 21
eISSN - 1099-1123
pISSN - 1090-6738
DOI - 10.1111/j.1099-1123.2010.00418.x
Subject(s) - clarity , audit , meaning (existential) , engineering ethics , political science , management science , sociology , public relations , business , epistemology , accounting , engineering , biochemistry , chemistry , philosophy
This paper examines the IAASB's policy proposals arising out of their review of the drafting conventions in auditing standards that has become known as the Clarity Project. The objectives of the Project and how they changed during its evolution are reviewed. One motivation for the Project was to ensure that auditing standards drafted by the IAASB are ‘principles‐based’. The failure to adequately consider the meaning of ‘principles‐based standards’ was responsible for a lack of clear focus on what was wanted from the Project. This resulted in two main objectives for the Project. The first was a search for fundamental principles of auditing that was incompletely realized, officially abandoned and subsequently covertly pursued in the revisions made to ISA 200. The second was a desire to promulgate standards that were ‘objectives‐based’ or ‘principles‐based’. Unfortunately, there was inadequate enquiry into the idea of an objective and the related idea of ‘objectives‐based’ standards. The paper clarifies their nature. It examines the idea of a conceptual framework for auditing and the explanations of objectives and ‘objectives‐based’ standards that emerged during the evolution of the Project. It considers the ideas objectives in ISAs, requirements and explanatory material in order to throw light on the nature of auditing standards that contain them. The question of whether an important distinction between ‘requirements’ and ‘presumptive requirements’ has been lost between the first and the second Exposure Draft is examined. This distinction can be explained and justified in terms of a distinction between different concepts of rules. It is suggested that the Clarity Project was a missed opportunity. The results are uncertain because there was a failure to undertake adequate conceptual enquiry into some of the concepts that directed its development. A start is made in rectifying this omission in the paper.