Global changes need to be made to auditor reporting rules
With audit standard setters and policy makers having such different views on how auditor reporting should be done could put global consistency at risk and perhaps result in investors not getting the information they need.
This is the warning from the ICAEW. The ICAEW are a leading professional membership organisation that promotes, develops and supports chartered accountants worldwide.
The EU, IAASB, FRC and the PCAOB all agree that changes need to be made to the way auditors report on financial statements, with auditors being required to provide more information in their reports.
However the ICAEW feels they are “out of synch” with the timing and content of their proposals and they feel this could cause confusion among investors.
The ICAEW are asking for an international consensus on how the auditor report should change in order to prevent duplication and overlap in the coming years.
Investors have said they would like to understand more about what auditors have done for the reports and to be more precise on what the major judgements were that took place and what the auditors focused the majority of their time on.
Different standard setters and policy makers and making different changing and they are not being consistent with each other. The FRC last year made changes to the UK’s auditing procedure, these include new reporting disclosures in which auditors have to provide an overview of the scope of the audit and show how it addresses the risk and materiality considerations.
But these changes differ from the recommendations being considered globally by the IAASB. The IAASB are proposing that going concern statements are made in all cases but this is not required with the FRC. Also in the IAASB’s proposals the reporting on the application of materiality would be dealt with as an ‘other matter’ but under the FRC this is seen as a key audit matter.
The ICAEW have been very critical towards the FRC’s decision to act ahead of global consensus, they feel this may “weaken the UK’s influence internationally”.
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