Auditor Reporting – The User Perspective
Consultation has concluded
You asked. We listened.
For many years, users demanded more than a binary pass/fail audit opinion. Wanting greater transparency about the auditor's responsibilities, as well as insight into what the auditor considered to be the key areas of the audit and what the auditor did in those areas were some of the requests heard.
The Auditing and Assurance Standards Board adopted the International standards on enhanced auditor reporting in April 2017. The implications of these new and revised standards resulted in a new auditor's report for all audits and impacted everyone involved in the financial reporting process, from management, toContinue reading
You asked. We listened.
For many years, users demanded more than a binary pass/fail audit opinion. Wanting greater transparency about the auditor's responsibilities, as well as insight into what the auditor considered to be the key areas of the audit and what the auditor did in those areas were some of the requests heard.
The Auditing and Assurance Standards Board adopted the International standards on enhanced auditor reporting in April 2017. The implications of these new and revised standards resulted in a new auditor's report for all audits and impacted everyone involved in the financial reporting process, from management, to the audit committee, to users of the auditor's report. Key revisions made to the auditor's report included:
- moving the opinion section to the beginning of the auditor’s report, capturing a reader's attention immediately;
- introducing a separate section when a material uncertainty exists and is adequately disclosed in the financial statements, entitled “Material Uncertainty Related to Going Concern”; and
- an enhanced description of the auditor’s responsibilities and key features of an audit.
The AASB also issued a new standard, CAS 720, The Auditor’s Responsibilities Related to Other Information. We heard users don't just use the audited financial information in their decision making but turn to other information, normally contained in an entity's annual report. CAS 720 deals with the auditor's responsibilities relating to other information, whether financial or non-financial information (other than financial statements and the auditor's report thereon), included in an entity's annual report. The standard requires the auditor to read and consider other information because other information that is materially inconsistent with the financial statements or the auditor's knowledge of the entity may indicate that there is a material misstatement in the financial statements or a material misstatement in the other information.
These above noted changes were effective for audits of general purpose financial statements for periods ending on or after December 15, 2018.
Given we are now three years into the enhanced auditor reporting standards, we would like to circle back to hear if we have met your requests. Users play a key role in shaping the future of auditor reporting. We need to know if we are meeting your needs!
The last phase of the enhanced auditor reporting standards is coming soon. You will see a new section in the auditor's report entitled, "Key Audit Matters," for entities listed on the Toronto Stock Exchange for periods ending on or after December 15, 2020. Other listed entities will follow in 2022.
Stay tuned and stay connected!
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What else should be communicated in the auditor's report?
over 2 years agoCLOSED: This brainstormer has concluded.In addition to what is required by the new and revised Auditor Reporting standards, what additional information in the auditor’s report would be useful to further enhance your understanding of the audit that performed? For example,
- information about materiality applied by the auditor in conducting the audit;
- information about the scope of the audit (i.e., the auditor’s approach to the audit);
- information about the auditor’s procedures relating to management’s going concern assessment; and
- information about other aspects of the audit.
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In addition to audits of financial statements, professional accountants perform other types of engagements for which assurance reports are issued. These include review engagements and other assurance engagements (e.g., assurance on greenhouse gas statements). Should the assurance reports for other types of engagements contain elements similar to those in the auditor’s reports on an audit of financial statements such as the structure of the report (i.e., opinion/conclusion first)?
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We welcome any further views, observations or suggestions you may have in relation to the auditor’s report.
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Who's Listening
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Phone 416-204-3443 Email cng@aasbcanada.ca