Chapter 10:Assessing Information and Govemance Hence,it does not cover special-purpose reporting to tax and regulatory authorities.A complete set of financial statements includes a balance sheet,income statement,cash flow statement,statement of changes in equity,and notes composing the summary of accounting policies and other explanatory notes. Some of the IASs and IFRSs are particularly important in financial sector assess- ments.A number of the standards are more relevant for the financial institutions.For instance,IAS 32 and IAS 39 provide requirements on the recognition,measurement, nents,and IAS 30 applies to the disclost res hy banks nd other similar cies and mmi ment other off-balar nce sheet items IAS L is als parti pertinent becaus e it deals with th content of fi ancial statem s gen ally.Boxe 10.4,10.5,and 10.6,provide further details of the scope of IAS 39,IAS 32,IAS 30 and IAS 1,respectively.IAS 39,which seeks the measurement of specified assets at fair value,may have significant effect on the volatility of earnings,levels of provisioning and various observed prudential ratios.and it has raised concerns among regulators.las 32 on financial instruments calls for a range of financial risk disclosures,thus seeking to improve transparency of financial risks,which may pose a challenge for some classes of ocial institutions (particularly insurance comp es)with traditionally weak risk dis clost es Thos ons highlight the ng standard s and the enges in ali ing convergence of nationa and intern Evolving issues in interationa 10 convergence in major markets are summarized in box 10. There are 33 ISAs,accompanied by a"Code of Ethics for Professional Accountants" and other related engagement standards.The auditing standards provide requirements on a range of issues,including quality control (ISA 220),documentation (ISA 230) responsibility to consider fraud and error (ISA 240),risk assessments of internal control (ISA 400),analytical procedures(ISA 520),and the auditor's report on financial state ments (ISA 700) reflect currer trends and issues in finan I reporting and au hich reflect global- zation,capital flows,regionalization,technology changes,and so industrialized countries relating to corporate business failures and misstatements of finan cial information have also raised the attention to the role and oversight of the auditing profession,the governance of standard-setting bodies,and the scope of corporate gover nance as it relates to reporting and disclosure.the lasb has been issuing new standards (IFRSs),and revising current IASs,while IFAC and its numerous committees and have been actively revising ISAs.For example,it recently released proposed revisions to ISA 230 on audit docu ntation.The IFAC's Public Secto tee (PSC)focuses or ncial report ade of ng,a onal,regional,and local governmen as well nchmark guideline also undertaken a multiye ctor Accounting Standards(ISAS)for goverment budget reporting that is IASs.It has also published a guidance paper on anti-money-laundering. One issue of particular relevance,especially to developing and emerging market economies,is the role of small and medium enterprises (SMEs)and the need to have 249249 Chapter 10: Assessing Information and Governance Infrastructure 1 I H G F E D C B A 12 11 10 9 8 7 6 5 4 3 2 Hence, it does not cover special-purpose reporting to tax and regulatory authorities. A complete set of financial statements includes a balance sheet, income statement, cash flow statement, statement of changes in equity, and notes composing the summary of accounting policies and other explanatory notes.9 Some of the IASs and IFRSs are particularly important in financial sector assess￾ments. A number of the standards are more relevant for the financial institutions. For instance, IAS 32 and IAS 39 provide requirements on the recognition, measurement, and disclosure of financial instruments, and IAS 30 applies to the disclosures by banks and other similar institutions of their income statement, balance sheet, and contingen￾cies and commitments, including other off-balance sheet items. IAS 1 is also particularly pertinent because it deals with the content of financial statements generally. Boxes 10.3, 10.4, 10.5, and 10.6, provide further details of the scope of IAS 39, IAS 32, IAS 30, and IAS 1, respectively. IAS 39, which seeks the measurement of specified assets at fair value, may have significant effect on the volatility of earnings, levels of provisioning, and various observed prudential ratios, and it has raised concerns among regulators. IAS 32 on financial instruments calls for a range of financial risk disclosures, thus seeking to improve transparency of financial risks, which may pose a challenge for some classes of financial institutions (particularly insurance companies) with traditionally weak risk dis￾closures. Those considerations highlight the significant challenges in aligning prudential standards with evolving accounting standards and the complexities involved in achiev￾ing convergence of national and international standards. Evolving issues in international convergence in major markets are summarized in box 10.7. There are 33 ISAs, accompanied by a “Code of Ethics for Professional Accountants” and other related engagement standards.10 The auditing standards provide requirements on a range of issues, including quality control (ISA 220), documentation (ISA 230), responsibility to consider fraud and error (ISA 240), risk assessments of internal control (ISA 400), analytical procedures (ISA 520), and the auditor’s report on financial state￾ments (ISA 700). The IASB and the IFAC’s IAASB constantly revise and update the standards to reflect current trends and issues in financial reporting and auditing, which reflect global￾ization, capital flows, regionalization, technology changes, and so forth. Recent events in industrialized countries relating to corporate business failures and misstatements of finan￾cial information have also raised the attention to the role and oversight of the auditing profession, the governance of standard-setting bodies, and the scope of corporate gover￾nance as it relates to reporting and disclosure. The IASB has been issuing new standards (IFRSs), and revising current IASs, while IFAC and its numerous committees and have been actively revising ISAs. For example, it recently released proposed revisions to ISA 230 on audit documentation. The IFAC’s Public Sector Committee (PSC) focuses on the accounting, auditing, and financial reporting needs of national, regional, and local governments, as well as on related agencies, and it proposes benchmark guidelines. It has also undertaken a multiyear initiative that is focusing on developing International Public Sector Accounting Standards (IPSAS) for government budget reporting that is based on IASs. It has also published a guidance paper on anti-money-laundering. One issue of particular relevance, especially to developing and emerging market economies, is the role of small and medium enterprises (SMEs) and the need to have