Auditor Reporting Post-Implementation Review (PIR)

Stakeholder Survey

The IAASB Auditor Reporting Implementation Working Group (ARIWG) is inviting stakeholders to contribute their views and input by participating in an online survey regarding the Auditor Reporting Standards.

 

Auditor Reporting PIR Stakeholder Survey

Survey open until October 23, 2020

CLICK HERE

 

Introduction to the IAASB Auditor Reporting Post-Implementation Review

Background to the New and Revised Auditor Reporting Standards 

In January 2015, the IAASB issued the new and revised Auditor Reporting Standards that aimed to enhance the communicative value and relevance of the auditor’s report.

Key proposals included:

(a)  For audits of financial statements of listed entities or when required by law or regulation (voluntarily application allowed for entities other than listed entities):
  • A new section in the auditor's report to communicate key audit matters (KAM). KAM are those matters that, in the auditor's professional judgment, were of most significance in the audit of the current period financial statements.
  • Disclosure of the name of the engagement partner.
(b)  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"; and
    • A new requirement to challenge the 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’ International Code of Ethics for Professional Accountants (Including International Independence Standards).
  • 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.

In addition, in April 2015, the IAASB issued a revised standard addressing the auditor’s responsibilities related to other information (ISA 720 (Revised)), which included responsibilities to communicate certain matters regarding other information in the auditor’s report.

  • Other information comprises financial and non-financial information in the annual report, other than the financial statements and the auditor’s report thereon.
  • When other information is included in the annual report, the auditor’s report includes an ”Other Information” section which is required to include a statement that management is responsible for the other information, identify the other information, clarify that the auditor’s opinion does not cover the other information, provide a description of the auditor’s responsibilities, and to either state that the auditor has nothing to report or describe any uncorrected material misstatement of the other information.  

The above new and revised standards became effective for audits of financial statements for periods ending on or after December 15, 2016 (some jurisdictions may have adopted the standards with a different effective date).

Given the significance of these new and revised standards and the importance of improving communication between auditors and users of auditor’s reports, the IAASB formed the Auditor Reporting Implementation Working Group (ARIWG), to provide ongoing support on this topic. To date, the ARIWG has undertaken various activities to raise awareness about the auditor reporting standards and promote and support adoption and implementation of the standards. The next phase of the ARIWG’s work is to undertake a post-implementation review.

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Post-Implementation Review (PIR)

The PIR comprises the following information gathering and research activities:

(a) A formal stakeholder survey

(b) Targeted outreach activities with particular stakeholder groups who engage with auditors or use auditor reports; and

(c) A review of academic research.

Through its information gathering and research activities, the ARIWG aims to achieve the following:

(a) Determine whether the Standards are being consistently understood and implemented in a manner that achieves the IAASB’s intended purpose in developing them.

(b) Identify how practical challenges and concerns are being addressed.

(c) Understand the extent of global demand for additional information in the auditor’s report to improve transparency about the audit. This relates to, for example, whether there is demandfor including the outcome of audit procedures with respectto key audit maters (KAM), additional communications about going concern, disclosures about materiality, and information aboutthe scope of the audit. 

(d) Understand the extent of global demand for wider application of those requirements that currently apply only to audits of financial statements of listed entities. This relates to, for example,whether requirements dealing with the communication of KAM and disclosure of the name of the engagement partner, should apply to entities other than listed entities (or for all auditor reports).

As a result, this survey includes a series of questions to gather input on the above matters.

Furthermore, this survey seeks the views of respondents about the reporting aspects of the IAASB’s Other Standards for which assurance reports are issued, i.e.:

(a) The International Standards on Review Engagements (ISREs); and

(b) The International Standards on Assurance Engagements (ISAEs).

In particular, the IAASB would like to gather input on whether reports issued in accordance with these standards should contain similar elements as an auditor’s report on an audit of financial statements.

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About the ARIWG

Given the significance of these new and revised standards and the importance of improving communication between auditors and users of auditor’s reports, the IAASB formed the Auditor Reporting Implementation Working Group (ARIWG), to provide ongoing support on this topic. To date, the ARIWG has undertaken various activities to raise awareness about the auditor reporting standards and promote and support adoption and implementation of the standards. The next phase of the ARIWG’s work is to undertake a post-implementation review.

 
 

Related Resources

 IAASB Auditor Reporting Project Update, January 2020  - Information about the IAASB’s planned post-implementation review and the results of a survey regarding the global implementation of the auditor reporting standards

Auditor Reporting Implementation Project Page - Follow the work of the ARIWG 

Auditor Reporting During the COVID-19 Pandemic - Information about the IAASB response to the COVID-19 pandemic

The New Auditor's Report - Resources issued by the IAASB after the release of the auditor reporting standards

 

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