KPMG overhauls approach to its audit reports

KPMG overhauls approach to its audit reports

KPMG invites listed audit clients to include broader qualitative commentary from the auditors in annual reports

KPMG is to overhaul its approach to audit reports, going beyond the FRC’s minimum regulatory requirements for long form audit reports.

The Big Four auditor said it has ‘invited’ its listed client companies to include its findings in so-called ‘long-form’ audit reports, which are published in a listed company’s annual report.

The new method follows KPMG’s field-testing of the approach with three audits, including Rolls Royce Holdings, earlier this year.

“Until recently an audit report gave a binary yes/no opinion on a company’s accounts in heavily standardised, generic text. It was boilerplate and there was a lack of transparency as to the auditor’s more detailed findings behind the scenes,” said Tony Cates, UK head of audit at KPMG.

In 2013, the FRC issued new requirements for a so-called ‘long-form’ audit report which included what specific matters the auditor saw as the major risks at an individual company and what work the auditor had done on those matters.

“In three pilot audit reports we included commentary from the individual senior audit partner. This discussed qualitative matters in order to help give colour, depth, and emphasise areas of risk that concern management, audit committee and investors alike,” Cates said.

KPMG will be inviting client companies to take up its offer from today and is discussing its new approach with the wider stakeholder group, including major investors and regulators. In order to include the findings in the long form audit report, the client must engage the firm to do so before the work for the final annual audit commences.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource