IAASB Finalizes Standards for Improving Audit Reports

To overhaul and enhance audit reports for shareholders and other users of financial statements, the IAASB has recently issued newly modified auditing standards.

Operating under IFAC, the IAASB has been efforting globally in recent years. On the other hand, for improvement of US firms’ audit reporting models, another scheme is being developed by the PCAOB but nothing is finalized yet.

Professor Arnold Schilder, the Chairman of IAASB stated that the auditors are going to change their behaviors, so the audit will be reinvigorated. The finalized ISAs have been regarded as important and unique initiatives by the detailed research and worldwide outreach of the final accounts preparers, auditors, national standards setters, regulators, investors and others. Now is the time for promoting and planning the endorsement of fresh and modified standards.

Most remarkably, now the auditors of public companies are required to convey the Key Audit Matters considered important by them while explaining about how their audit addresses those matters.

Linda de Beer, chair of IAASB Consultative Advisory Group noted that this new requirement will result in enhancing the financial reporting quality as well as changing auditor’s reports, providing transparent and fair information to the stakeholders.

Increasing the focus of auditors over going concern issues has also been processed by the IAASB.

The former Deputy Chair of IAASB, Dan Montgomery, mentioned that IAASB answered to investors’ queries that it is important for auditors to deliver transparent information regarding the audit they have executed. Improving the audit report’s understandability is crucial to the value of FS audit.

For the periods going to end on December 15, 2016 or after, the modified standards will be applicable for the financial statements audits.

Kathleen Healy, the technical director at IAASB mentioned that issuing finalized standards as a result of the last six years’ work is not the end of IAASB’s efforts for audit reporting. Healy emphasized the efforts of the staff and the board in continually promoting awareness of the new standards and facilitating their endorsement as well.

A post implementation review is also planned to be conducted by the IAASB in order to assess if the standards require any more changes.