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!
