You are on page 1of 3

Menu

Search

Philippine Accounting Updates


New Auditors Report effective December 15, 2016
Posted by Orlando Calundan

Auditors report is the main deliverable in an audit engagement. An audit of financial statements primary objective
is to express an opinion whether the financial statements are free from material misstatements. But aside from the
opinion, there is an increasing need for communication of other significant items both to those charged with
governance and the users of the financial statements. This is the reason why changes are made to the auditors
report.
What are the Changes?
Advertisements

Mandatory for audits of financial statements of listed


entities, voluntarilyapplication allowed for entities other
than listed entities:
New section to communicate key audit matters (KAM).
KAM are thosematters that, in the auditors judgment,
were of most significance in the auditof the current
period financial statements
Disclosure of the name of the engagement partner (in the
Philippines, this is being done)
For all audits:
Opinion section required to be presented first, followed
by the Basis forOpinion section, unless law or regulation
prescribe otherwise
Enhanced auditor reporting on going concern, including:
Description of the respective responsibilities of management and theauditor for going concern
A separate section when a material uncertainty exists and isadequately disclosed, under the heading
Material Uncertainty Related toGoing Concern
New requirement to challenge adequacy of disclosures for closecalls in view of the applicable
financial reporting framework when eventsor conditions are identified that may cast significant doubt
on an entitysability to continue as a going concern
Affirmative statement about the auditors independence and fulfillment ofrelevant ethical responsibilities,
with disclosure of the jurisdiction of origin ofthose requirements or reference to the International Ethics
Standards Board forAccountants Code of Ethics for Professional Accountants
Enhanced description of the auditors responsibilities and key features ofan audit. Certain components of
the description of the auditors responsibilitiesmay be presented in an appendix to the auditors report or,
where law,regulation or national auditing standards expressly permit, by reference in theauditors report to a
website of an appropriate authority
Why is it Changing?
The auditors report is the key deliverable addressing the output of the auditprocess. Investors and other users of
financial statements have called for theauditors report to be more informative in particular, for auditors to
provide morerelevant information to users based on the audit that was performed.

The IAASB agrees that enhanced auditor reporting is critical to influencingthe value of the financial statement
audit, and to the continued relevance ofthe auditing profession. Therefore, the overall objective of the IAASBs
auditorreporting project has been to enhance the communicative value of the auditorsreport, in the public
interest.
What are the Intended Benefits?
The IAASB intends for its new and revised Auditor Reporting standards to resultin an auditors report that
increases confidence in the audit and the financialstatements. The IAASB believes that in addition to the
increased transparency andenhanced informational value of the auditors report, changes to auditor reportingwill
also have the benefit of:
Enhanced communications between investors and the auditor, as well as theauditor and those charged with
governance
Increased attention by management and those charged with governance tothe disclosures in the financial
statements to which reference is made in theauditors report
Renewed focus of the auditor on matters to be communicated in the auditorsreport, which could indirectly
result in an increase in professional skepticism
Informed by international academic research, public consultations, and stakeholderoutreach, the IAASB developed
the new and revised Auditor Reporting standardsthat represents and supports an important change in practice.
Which ISAs are Changing?
ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements
New ISA 701, Communicating Key Audit Matters in the Independent AuditorsReport
ISA 705 (Revised), Modifications to the Opinion in the Independent AuditorsReport
ISA 706 (Revised), Emphasis of Matter Paragraphs and Other MatterParagraphs in the Independent Auditors
Report
ISA 570 (Revised), Going Concern
ISA 260 (Revised), Communication with Those Charged with Governance
Conforming amendments to other ISAs
When are the Changes Effective?
The new and revised Auditor Reporting standards will be effective for audits offinancial statements for periods
ending on or after December 15, 2016.
Let us know your thoughts!

Disclaimer: Opinions expressed in this article are that of the author and information provided are for general
conceptual guidance for public information and are not substitute for expert advice. Contact
support@philcpa.org for more information and if you want to avail professional services. Find us on Facebook!

Tweet
October 23, 2015

More
0 Comments

Previous

Next

View Full Site


Proudly powered by WordPress

You might also like