IAASB New Auditor's Report
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Transcript of IAASB New Auditor's Report
IAASB New Auditor’s Report
James GunnManaging Director, Professional Standards
Why Change the Auditor’s Report?
Stimulate more robust interactions and communication between auditor and entity
Enhance preparer focus on key risk areas and disclosures
Enhance communicative value to users
Clarify responsibilities, and improve understanding of audit
Improve audit quality and professional skepticism
Improve relevancy of audit
The Global Journey
20132014
2015
2016
2017
Enhanced reporting by auditor, management and TCWG (2013)Enhanced auditor reportingfor PIEs (2014)
Some “early birds” with new style audit reports under the ISAs including KAMs
ISAs come into effect for Dec 2016 year ends
Mandatory ‘dry runs”
Re-Proposed auditor reporting standards
EU – Enhanced auditor reporting for all PIEs come into effect (2017)
(May 2016)
The New ISA Auditor’s Report – What’s Changed
Key Audit Matters
Matters communicated with TCWG
Matters that required significant auditor attention
Matters of most significance in the audit
• Required for listed entity audits, voluntary for others
• Areas of higher risk, significant auditor judgement, matters of significant affect on audit
• Communication: why matter is a KAM, how addressed, related F/S disclosures
• Documentation: Auditor judgements & decisions on KAM
KAM – Delivering Entity-Specific Information to Users
Consistency and Comparability
Relevance and Usefulness
Boilerplate, generic language;not relevant to the entity or audit
Entity- and audit specific information of increased value
Other Key Features of the New Auditor’s Report
Auditor’s ReportAudit Opinion – Required to be presented first
Key Audit Matters – Required for listed entities
Going Concern – Additional focus
Other Information – Enhanced work effort and new section
Responsibilities – In the audit; Independence and ethical obligations; Engagement partner (listed entities)
What We Are Hearing…
“Now much more engagement
between auditor and management”
Some initial evidence of enhanced audit quality, also
benefits to corporate governance
“Valued new source of complementary
information”
“Positive experience!”
“Visually appealing reports, information clearly signposted,
clear and logical structure”
Start early, bring management and
corporate governance on the journey
“Write with the audience in mind”
a
Innovative approaches welcomed!
Enhanced Auditor Reporting and Audit Quality
Process
OutputsInputs
AuditQuality
TCWG
Auditor
Manage-ment Users
Regul-ators
Interactions
Diagram extracted from:A Framework for Audit Quality: Key Elements that Create an Environment for Audit QualityFebruary 2014
Implementation Resources
• Auditor Reporting Fact Sheet • Auditor Reporting “At a Glance”• Basis for Conclusions• Guidance on KAM and Going Concern • Illustrative KAM examples • Targeted publications, e.g., “More
Informative Auditor’s Reports – What Audit Committees and Finance Executives Need to Know”
….And More
…A Beginning of a Journey
ISAs fit for purpose
Transparency & audit quality
Independent and challenging skeptical mindset
Continuing Improvement to Meet the Public Interest
Proactive quality manage-ment
Reinforcing robust
communic-ation
www.iaasb.org