Acca aaa s21 Notes

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12.2. Transnational audits
Transnational audits are NOT the same as international audits. International audits simply refer to the 
audit of a company or group that has operations in more than one country so that auditing has to 
take place in more than one country.
A transnational audit is the audit of financial statements where those financial statements will be 
relied upon outside the audited entity’s home jurisdiction for the purposes of significant lending, 
investment or regulatory decisions.
For example, there could be a large company whose operations were entirely within the UK, but 
whose shares are listed both in London and New York.
The international use of the financial statements causes some potential problems:
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Different (and unexpected) auditing standards might be used.
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Different (and unexpected) accounting standards might be accepted.
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Different ethical and quality standards might have been applied.
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Different corporate governance standards
In short, there is a danger that the financial statement are misunderstood when looked at by someone 
from a different country.
The Forum of Firms (FoF) is an independent association of international firms of accountants who 
carry out transnational audits. The aim is to promote consistent and high quality standards of financial 
reporting and auditing practices. The IFAC Transnational Auditors’ Committee (TAC) is the official link 
between IFAC and the FoF. It can promote the FoF’s objectives and operations and also it encourages 
members of the FoF to conduct high quality audits.