The Auditing and Assurance Standards Board (AUASB) has issued one new, a number of revised and amended auditing standards that adopt the recent improvements made to the equivalent International Standards on Auditing (ISAs) by the International Auditing and Assurance Standards Board (IAASB).
The improvements to the auditing standards comprise enhancements to:
- Auditors’ reports on financial reports – including the communication of Key Audit Matters (KAM) for listed entities;
- The auditor’s responsibilities relating to other information; and
- A greater focus on considering disclosures in financial statements.
The changes to the auditing standards have resulted in:
- One new standard on communicating Key Audit Matters (KAM);
- Revisions of six existing auditing standards; and
- Conforming amendments to 18 other existing auditing standards.
Announcing the enhancements to the Australian Auditing Standards, AUASB Chairman, Ms Merran Kelsall, said:
“This initiative by the AUASB following on from the IAASB’s projects in this area, has now been finalised. It is the culmination of several years of important work and a comprehensive programme of stakeholder engagement by both boards.
The new KAM section of the auditor’s report for listed entities, will add significant value to the auditor’s communications with users of the auditor’s report. The inclusion of KAM in a listed entities audit report will provide insights into the auditor’s key focus areas, by describing why certain matters were of most significance in the audit of the current period and what audit approach the auditor has adopted to address these.
The look and feel of the auditor’s report will be improved, with the auditor’s opinion now prominently located at the beginning of the report. The KAM section of the auditor’s report, together with improvements in describing the responsibilities of both management and the auditors, will go a long way to help users better understand the conduct of the audit.
Other amendments to the auditing standards have been included to clarify the auditor’s existing responsibilities regarding consideration of other information during the audit. The underlying concept remains to ensure consistency between audited information and unaudited information contained in the annual report.
Finally, the focussing of the auditor’s attention on financial statement disclosures, comes at just the right time when there have been calls by regulators and standards-setters for a closer look at this area” Ms Kelsall said.
All changes are applicable to audits of financial reports for financial reporting periods ending on or after 15 December 2016.