New Auditing Reporting Model Floated by IAASB; Spurred by Crisis
By Steve Burkholder
NORWALK, Conn.–Auditors of listed companies worldwide may be called to go beyond the bare-bones “pass/fail” auditor opinion and report on “key audit matters,” address going concern issues and significant risks faced by a firm, and name the audit engagement partner if a new proposal of a global auditing panel is finalized.
Those planned changes stand out in revised and new international auditing standards floated July 25 by the International Auditing and Assurance Standards Board. IAASB is an arm of the International Federation of Accountants, the global professional accountants group that includes the American Institute of Certified Public Accountants as a member.
Spurred by the financial crisis, IAASB argues that significant change to the auditor’s reporting model–a topic on which the leading U.S. auditing rulemaker plans to issue its own proposal in September–is warranted. More information provided by auditors is needed, and will enhance the credibility of the audit and of financial statements, according to the international board.
As suggested in public discussions held by IAASB in 2012, an auditor’s highlighting of matters that arose during an audit could help signal risks or areas of potential concern in a company’s operations.
However, companies and auditing firms cautioned against having auditors offer the kind of information about a company and its accounting that, in their view, should be conveyed by management.
The IAASB proposal on auditor’s reporting is at https://www.ifac.org/publications-resources/reporting-audited-financial-statements-proposed-new-and-revised-international. The proposal includes a brief explanatory memorandum, which is at https://www.ifac.org/sites/default/files/publications/files/Explanatory%20Memorandum%20Included%20in%20the%20ED.pdf.