Audit reporting enhancements and Key Audit Matters
How the Australian audit reporting changes may affect you
For years, the report that comes from the company’s audit firm has been criticized as providing very little useful information for investors. Investors have been calling on the audit report to be enhanced from its pass/fail approach for some time. They have requested that the key areas identified in the course of the audit be explained and conclusions drawn on how the auditors were able to gain comfort.
To facilitate this, the International Auditing and Assurance Standards Board (IAASB) have undertaken a specific project to enhance the auditor’s report, communication of their responsibilities with investors, and issues identified through the course of the audit.
This project’s objectives included:
- enhancing the communicative power and relevance of the auditor’s report through changes in its structure and content; and
- determining whether the reporting suite of International Standards of Auditing (ISAs) can be modified to accommodate evolving financial reporting regimes, while ensuring continuing communication of essential content.
In line with other countries, Australia is moving towards a more meaningful audit report for investors. Following extensive consultation, the Australian Auditing and Assurance Standards Board (AUASB) have approved the new auditors’ reporting standards. The standards will be effective for periods ending on or after 15 December 2016.