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On January 15 the International Auditing and Assurance Standards Board (the IAASB) published new and revised auditor reporting standards that represent a ‘significant change’ that enhances the nature of communications with stakeholders, according to KPMG.

The new requirements of the International Auditing and Assurance Standards Board[2] (the IAASB) have been introduced to improve transparency and clarity regarding the auditor’s responsibilities when performing an audit, and regarding the information that auditors provide to users about the audit.

Commenting on the new reporting standards, Larry Bradley, KPMG’s Global Head of Audit, said: “For listed companies, the new requirements represent a significant change in auditor reporting.  They introduce a level of transparency that can enable users to better recognize the value of an audit.”

The most significant change introduced is the requirement for auditors of listed companies to include in their auditor’s report descriptions of key audit matters, which are selected from matters discussed with company directors. The descriptions will outline why the auditor judged the matter to be one of most significance to the audit and how they addressed it. Bradley continued: “The introduction of these descriptions is a significant change in auditor reporting. They provide the means for the auditor to address user demand for more information on the audit.”

For all companies, the revised auditor’s report will include a statement outlining the auditor’s responsibilities for ‘other information’ and their findings, as well as revised descriptions of the auditor’s responsibilities and those of company management. For audits undertaken in accordance with International Standards on Auditing (ISAs), the new standard takes effect for annual periods ending in December 2016, although auditors can choose to apply it earlier.

Ashley Clarke, Head of Audit, KPMG in Kazakhstan and Central Asia, said: “Examples of the key audit matters which we may see in audit reports for Kazakh companies include the approach taken over the valuation of financial instruments (in particular for audit reports on banks with significant portfolios of impaired loans). Another area could be the auditor’s approach to assessing the completeness and accuracy of related party transactions, and ensuring that these have been adequately disclosed and accounted for in the financial statements. Finally, for companies in extractive industries with significant investments in plant and equipment, the approach to assessing assumptions used in impairment testing could merit particular attention by the auditor, and be included in their report to shareholders.”

 

[1]Reporting on Audited Financial Statements – New and Revised Auditor Reporting Standards and Related Conforming Amendments – аудиторское заключение по проаудированной финансовой отчетности – новые и пересмотренные стандарты, касающиеся аудиторских заключений, и соответствующие поправки, внесенные в другие стандарты.

[2]Reporting on Audited Financial Statements – New and Revised Auditor Reporting Standards and Related Conforming Amendments.

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