Engagement and Outreach in Support of the New Auditor’s Report
Natalie Klonaridis, IAASB Principal | December 14, 2016 | 1
The International Auditing and Assurance Standards Board (IAASB)’s new and revised auditor reporting standards are about to take effect—they will become effective for periods ending on or after December 15th, 2016.
Since January 2015, when the standards were issued, the Auditor Reporting Implementation Working Group was established by the IAASB to promote awareness and understanding and to support effective implementation. Working Group representatives have spent 2016 attending various outreach events and engaging stakeholders around the world to support implementation. And as more countries begin to adopt the standards and early adopters emerge, discussions with stakeholders have evolved to focus on actual experiences. These conversations have assisted the Working Group in understanding implementation experiences, including any practical challenges and how such challenges are being addressed.
These conversations also helped the Working Group identify some common areas in need of further clarity, which are the basis of The New Auditor’s Report: Questions and Answers. Topics covered include:
- which entities are considered to be listed entities;
- whether the communication of key audit matters is required when the entity prepares both consolidated and separate financial statements of the parent or holding company;
- the appropriateness of referring to the International Standards on Auditing when the jurisdiction has not adopted the new or revised Auditor Reporting Standards or ISA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information; and
- circumstances when the auditor reissues the report or amends the report previously issued, and the effect on the key audit matters and other information.
In addition, to further support implementation by small-and medium-sized practices, an important constituency for the IAASB, the World Bank Centre for Financial Reporting Reform (CFFR) hosted a virtual “training of trainers” workshop in September 2016. Dan Montgomery, Chair of the Working Group, explained the changes introduced and their intended benefits, and shared implementation experiences learned through stakeholder engagement. The CFFR discussion was followed by commentary from a practitioner’s perspective, which included examples, as well as a Q&A session. The workshop included participants across Europe, including Albania, Austria, Bosnia and Herzegovina, Kosovo, Montenegro, Macedonia, Serbia, and Poland.
The Working Group is also exploring possible approaches to a post-implementation review, which was discussed with the IAASB at its September 2016 meeting. The post-implementation review’s purpose would be to determine whether the new and revised auditor reporting standards need further refinement arising from:
- issues that cause the standards to not achieve their intended purpose;
- a need to improve the quality of the communication of key audit matters;
- practical implementation issues;
- developments in auditor reporting around the world since the issuance of the standards; and
- other matters that could improve transparency about the audit that were not included in the standards, for example, the disclosure of materiality and the scope of the audit.
The IAASB will conduct informal post-implementation review activities in 2017–2018, with a more formal post-implementation review commencing in 2019 (after the standards have been in use for long enough to truly assess impact and results).
More information about the new and revised auditor reporting standards, please visit our auditor reporting project web page.