1 / 15

Auditor Reporting

Auditor Reporting. Dan Montgomery, IAASB Task Force Chair Global Auditor Investor Dialogue Meeting 19 April 2012. Outline. Project Objectives Timing Recap of IAASB Discussions to Date Relevant Task Force Discussions Planned Outreach and Consultation. The IAASB’s Auditor Reporting Project.

jenibelle
Télécharger la présentation

Auditor Reporting

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Auditor Reporting Dan Montgomery, IAASB Task Force Chair Global Auditor Investor Dialogue Meeting 19 April 2012

  2. Outline • Project Objectives • Timing • Recap of IAASB Discussions to Date • Relevant Task Force Discussions • Planned Outreach and Consultation

  3. The IAASB’s Auditor Reporting Project Project Objectives • Determine core elements that are suitable for a global auditor’s report under a Revised ISA 700 for all entities • Determine additional elements that may be suitable based on the type of entity (“building blocks” approach) • Provide flexibilities in format and content to accommodate additional or different jurisdictional reporting requirements, including corporate governance reporting • Liaise and coordinate with others to minimize unnecessary differences • Contribute to enhancing corporate financial reporting more broadly

  4. Focus of Subcommittees What Areas Have Been the IAASB’s Focus, and Why? • Key messages received from May 2011 consultation paper • Now is the time for change, and a global, yet flexible, solution is needed • Audit is valued, but auditor’s report lacks communicative value • Users want more relevant and decision-useful information about the entity and the audit – avoid solutions that only involve boilerplate language • Responses to calls for change at a national level • European Commission – focus on going concern, also proposals relating to transparency about the audit of public interest entities (PIEs) • PCAOB – focus on auditor commentary, clarifications to align with ISA 700 • Other initiatives – French justification of assessments model, UK FRC enhancements to corporate governance reporting

  5. The IAASB’s Auditor Reporting Project Timing • “Invitation to Comment” demonstrating substantial progress and innovative IAASB thinking on critical issues in June 2012 • Exposure drafts of Revised ISA 700 (others as identified) targeted Q2 2013 • Final standards targeted Q4 2014 • Need for coordination with others in national jurisdictions progressing their own initiatives

  6. The IAASB’s Auditor Reporting Project Recap of IAASB’s Discussions to Date • Strong Board agreement of the need to progress change in auditor reporting, and on an accelerated timeline • Agreement to maintain the current scope of an ISA audit • Agreement to require auditor commentary for listed entities • Asked TF to further consider requiring for public-interest entities • Need for further consideration of how “users” are defined • Links to the financial reporting framework, but clearly broader than investors • May have implications for other ISAs, e.g., ISA 320 • Confirmation of the need to consult with illustrative report(s) • A number of key issues highlighted for TF’s further consideration – two additional April teleconferences planned

  7. Auditor Commentary Draft Objective of Auditor Commentary The objective of the auditor in providing auditor commentary, having formed an opinion on the financial statements, is to provide transparency about key matters of audit significance that, in the auditor’s judgment, are likely to be most important to users’ understanding of the financial statements and the audit, for their economic decisions taken on the basis of the financial statements. The broad category of auditor commentary would include required conclusions on certain matters for all entities, as well as additional commentary for public interest entities, and matters previously addressed by emphasis paragraphs

  8. Auditor Commentary Explicit Statements about Going Concern and Other Information in All Auditor’s Report • Auditor conclusion about the appropriateness of the use of the going concern assumption and whether material uncertainties have been identified • Premised on the work effort in the current auditing standards • Enhanced contextual information to supplement the conclusion • Would be supplemented by auditor commentary (similar to current Emphasis of Matter paragraphs) when material uncertainties have been identified • May be supplemented by entity-specific auditor commentary in “borderline” cases for public interest entities • Some concern that a conclusion could provide false assurance to investors • Description of responsibilities and auditor about other information • Based on auditor’s responsibility to read this information, specific other information named • Applicable to all audits unless requirement not relevant in engagement circumstances (e.g., for SMEs if no other information included)

  9. Auditor Commentary Additional Entity-Specific Auditor Commentary for Public Interest Entities • To provide transparency about key matters of audit significance that are likely to be most important to users’ understanding of the financial statements and the audit • No specific items mandated, but the auditor would always take into account • Significant risks and areas of high assessed risks of material misstatement • Audit implications of unusual transactions, restatements, and other significant changes • Significant qualitative aspects of the entity’s accounting practices, including accounting policies, accounting estimates, and financial statement disclosures • Other areas of significant discussion with management and TCWG about the entity’s financial statements, or the conduct of the audit, and any other matter that is fundamental to users’ understanding of the financial statements

  10. Auditor Commentary What Does Additional Entity-Specific Auditor Commentary Look Like? • Flexibility needed • In the level of detail based on the matters being described • Need to align with national frameworks (for example, UK, France, US) • Users seek to understand why the matter was an area of audit emphasis and why the auditor believes commentary is needed • Nature and extent of commentary affected by • The extent to which the matter is described in the financial statements • Whether the auditor believes additional information would be important for users’ understanding of the matter(s) or the conduct of the audit (e.g., whether a description of procedures, conclusion, or further context would be useful) • Requirements established by law or regulation • Non-PIEs can provide additional auditor commentary if considered necessary

  11. Auditor Commentary How Could Public Interest Entities Be Defined on an International Basis? • Based on the definition in the Ethics Code • All listed entities • Any entity defined by regulation or legislation as a PIE, or for which the audit is required to be conducted in compliance with the same independence requirements that apply to an audit of listed entities • Other definitions based on national reporting regimes set by • National auditing standard setters • Securities or audit regulators • Legislative bodies (e.g., the European Commission) • Guidance to explain that other entities could be treated as PIEs (e.g., financial institutions (such as banks and insurance companies) and pension funds)

  12. Clarifications Clarification of the Auditor’s Responsibilities and Transparency about the Audit • Proposal to mandate identification of the engagement partner name for audit reports for all entities • Proposal to require a statement of compliance with ethical requirements, particularly independence, for all entities • Proposals to describing a risk-based audit – a method of reinventing boilerplate language to present auditor’s responsibilities in a more understandable fashion • Clarify key terms, such as reasonable assurance and materiality • Further explain the auditor’s responsibilities relating to fraud, estimates, internal control, and disclosures • Highlight key concepts in auditing such as independence, professional judgment and professional skepticism

  13. Building Blocks The “Building Blocks” Approach • Support for an auditor reporting framework to allow • Flexibility for NSS to tailor the auditor’s report to their regime and prescribing wording and placement, as necessary • Scalability for SMEs • Support for prominently displaying the more tailored information in the illustrative report provided on consultation • Opinion first • Basis for opinion for all reports to note audit in accordance with ISAs and refer to compliance with ethical responsibilities • Auditor commentary, including GC/OI conclusions and additional auditor commentary • Management’s responsibility • Expanded description of auditor’s responsibility

  14. Building Blocks Providing Entity-Specific Information

  15. Planned Outreach and Consultation • Pre-June 2012 consultation • Auditors (small and medium practices, as well as Forum of Firms) • Investors (GAID and others, as a means of “testing” certain proposals to ensure they are responsive to user demands) • National auditing standard setters • Post-June 2012 consultation • IFRS Advisory Council, CFA Institute, ICGN, IFIAR, IOSCO • 3 Roundtables (Asia, North America, Europe), focused on users • Preparers and others (executives, lawyers, not-for-profits, etc.) • Ongoing outreach activities by IAASB Leadership • PCAOB SAG and other PCAOB and EC Staff discussions, as appropriate

More Related