On January 15 the International Auditing and Assurance Standards Board (the IAASB) published new and revised auditor reporting standards that represent a 'significant change' that enhances the nature of communications with stakeholders, according to KPMG.
The new requirements of the International Auditing and Assurance Standards Board (the IAASB) have been introduced to improve transparency and clarity regarding the auditor's responsibilities when performing an audit, and regarding the information that auditors provide to users about the audit.
Commenting on the new reporting standards, Larry Bradley, KPMG's Global Head of Audit, said: "For listed companies, the new requirements represent a significant change in auditor reporting. They introduce a level of transparency that can enable users to better recognize the value of an audit."
The most significant change introduced is the requirement for auditors of listed companies to include in their auditor's report descriptions of key audit matters, which are selected from matters discussed with company directors. The descriptions will outline why the auditor judged the matter to be one of most significance to the audit and how they addressed it. Bradley continued: "The introduction of these descriptions is a significant change in auditor reporting. They provide the means for the auditor to address user demand for more information on the audit."
“With the new requirements in place, auditor reports will in fact become more comprehensible and more interesting to a wider audience. This has been proved by the UK experience, where similar requirements are already in place: some auditor reports prepared by our colleagues were widely discussed in the media and in the investment community,” says Andrei Shvetsov, partner, Head of Audit in Russia and the CIS.
For all companies, the revised auditor's report will include a statement outlining the auditor's responsibilities for 'other information' and their findings, as well as revised descriptions of the auditor's responsibilities and those of company management. For audits undertaken in accordance with International Standards on Auditing (ISAs), the new standard takes effect for annual periods ending in December 2016, although auditors can choose to apply it earlier.