IAASB Seeks to Improve Auditor Reporting on Financial Statements

by CFO Innovation Asia Staff, 25 June 2012

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Accounting and Regulations Auditing

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auditing auditor financial statement International Auditing and Assurance Standards Board

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The International Auditing and Assurance Standards Board (IAASB) has released a key milestone consultation document in its work to enhance, on a global basis, the communicative value of the auditor’s report on financial statements.

The IAASB’s Invitation to Comment: Improving the Auditor’s Report sets out the indicative direction of the board’s future standard-setting proposals to improve how and what auditors report in accordance with International Standards on Auditing (ISAs).

The Invitation to Comment (ITC) features a revised auditor’s report that illustrates the application of the IAASB’s suggested improvements. The ITC also provides the IAASB’s rationale for the suggested improvements, together with a discussion of their potential value and impediments, and in what areas feedback is sought.

“The global financial crisis has spurred users of audited financial statements to want to know more about individual audits and to gain further insights into the audited entity and its financial statements," says Prof. Arnold Schilder, IAASB chairman.

Schilder adds that while the auditor’s opinion is valued, many perceive that the auditor’s report could be more informative and shine light on key matters based on the auditor’s work.

"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,” says Schilder.

At the heart of the suggested improvements is the need for transparency on matters specific to the audited financial statements and the audit that was performed.

A proposed new section in the auditor’s report, “Auditor Commentary,” is envisaged to be the mechanism by which auditors may call attention to matters that are, in the auditor’s judgment, likely to be most 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.

"It is critical that the IAASB hear from a wide range of stakeholders at this stage regarding the suggested improvements and whether they will achieve the value that users seek in order for the board’s future standard-setting proposals to develop in a way that will best serve the public interest,” notes James Gunn, IAASB technical director.

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CFO Innovation Asia Staff

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Submitted by Aakash Chatterjee on 15 March 2013 - 7:06pm

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There have been harsh

Submitted by Pradipta Dutta on 14 March 2013 - 8:29pm

There have been harsh implications of the economic meltdown, and the financial crisis is still not over. It would take some time to find a stability. Taking careful steps is essential, it is better to make financial arrangements to cover unexpected expenses including retirement expenses.

The financial crisis has

Submitted by Prabir Banik on 5 March 2013 - 5:36pm

The financial crisis has been severe and it is still making big changes in the market. An organization now needs to reevaluate its policy, it is necessary to focus improving the quality of transaction system and accuracy of financial planning.

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