ACCA Releases New Report Analysing the Impact of Recent Changes Made to Auditor Reporting Standards
ACCA (the Association of Chartered Certified Accountants) has recently released a new report named ‘key audit matters: unlocking the secrets of the audit’ as per which the recent changes made to standards pertaining to reporting of audit findings by the auditor not only have helped in improving the quality of information reported to investors, but the changes also had a positive impact on broader components of financial reporting which also includes corporate governance and reporting.
The report analyses the impact of changes made to standards relating to reporting of audit findings by the auditor, which became effective for application in many countries of the world for year-end audits in which year ended in December 2016. In order to analyze the impact of said changes, the ACCA examined 560 audit reports that had incorporated the recent changes from eleven countries pertaining to four continents.
The change that had the most impact out of all the changes is the introduction of key audit matters. The said change is a response to demands from stakeholders asking for more detail regarding the audit approach and process, and more clarity and transparency regarding findings in the audit report. The change basically requires the auditor to list down the areas that during the course of audit has been observed to be involving the most risk and also explain the audit plan and approach regarding those particular areas.
In addition to the above mentioned change, the revised standards requires the auditor to prioritise information to which the users are more concerned with and consider relevant, and also improve disclosure requirements regarding ‘going concern’ issues.
As per the report released by the ACCA, the revised standards have improved the quality of information that is made available to investors. The revised version of the standards also encourages improvements in the entire entire financial reporting process.