Effective 15th December, 2016. Auditor’s report is the main deliverable in an audit engagement. An audit of financial statements’ primary objective is to express an opinion whether the financial statements are free from material misstatements. But aside from the opinion, there is an increasing need for communication of other significant items both to those charged with governance and the users of the financial statements. This is the reason why changes are made to the auditor’s report.
What are the changes?
Mandatory for audits of financial statements of listed entities, voluntarily application allowed for entities other than listed entities:
- New section to communicate key audit matters (KAM). KAM are those matters that, in the auditor’s judgment, were of most significance in the audit of the current period financial statements
- Disclosure of the name of the engagement partner
For all audits:
- Opinion section required to be presented first, followed by the Basis for Opinion section, unless law or regulation prescribe otherwise
- Enhanced auditor reporting on going concern, including:
- Description of the respective responsibilities of management and the auditor for going concern
- A separate section when a material uncertainty exists and is adequately disclosed, under the heading “Material Uncertainty Related to Going Concern”
- New requirement to challenge adequacy of disclosures for “close calls“ in view of the applicable financial reporting framework when events or conditions are identified that may cast significant doubt on an entity’s ability to continue as a going concern
- Affirmative statement about the auditor’s independence and fulfillment of relevant ethical responsibilities, with disclosure of the jurisdiction of origin of those requirements or reference to the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants
- Enhanced description of the auditor’s responsibilities and key features of an audit. Certain components of the description of the auditor’s responsibilities may be presented in an appendix to the auditor’s report or, where law, regulation or national auditing standards expressly permit, by reference in the auditor’s report to a website of an appropriate authority.
Download the full report here