A CONSULTATION document outlining a new approach to the way auditors report on financial statements has been issued by the global assurance board.
The International Auditing and Assurance Standards Board (IAASB) has invited comments on standard-setting proposals to improve how and what auditors report, in accordance with International Standards on Auditing (ISAs).
Arnold Schilder, chairman of the IAASB, warned that, although the auditor’s opinion is valued, there is a perception that the auditor’s report could be more informative.
“Change, therefore, is essential and the IAASB is strongly committed in the public interest to deliver meaningful improvements to auditor reporting as quickly as possible,” he said.
At the heart of the suggested improvements is the need for transparency on matters specific to the audited financial statements and the audit performed. The IAASB has proposed adding a new section whereby the auditor can call attention to matters important to the users’ understanding of the audited financial statements or the audit.
There are also suggested improvements with respect to new statements regarding going concern and other information in documents containing the audited financial statements; the description of the responsibilities of the auditor and key features of the audit itself; and enhancement to the format of the report.
“Mandatory auditor commentary will go a long way to address this need of shareholders and others,” said Linda de Beer, IAASB Consultative Advisory Group chairman.
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