The International Auditing and Assurance Standards Board has proposed two new standards relating to controls at service organisations and a third standard for the communication of deficiencies in internal control to those in charge of governance.

The proposed international standard on auditing (ISA) 402 (revised and redrafted), ‘audit considerations relating to an entity using a third party service organization’ deals with the auditor’s responsibilities to obtain audit evidence when a client uses one or more service organisations.

The proposed international standard on assurance engagements (ISAE) 3402, ‘assurance reports on controls at a third party service organization’, is expected to bring consistency in reporting on controls at service organisations.

This standard in particular will ensure reports issued in one country are likely to meet the requirements of the auditors in other countries.

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