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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?
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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!
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October 23, 2015
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