• Register
Return to: Home > Comments > Improving the Auditor's Report

Improving the Auditor's Report

The International Auditing and Assurance Standards Board's (IAASB) recent paper, Improving the Auditor's Report makes a strong case for change in the way auditors communicate. Research and consultation with stakeholders, including the users of audited financial statements, has led the IAASB to declare that "the status quo is not an option".

The auditor's report has, in the past, been one of the least complex sections in a set of financial statements. In its current form it provides what is effectively a 'yes or no' answer to the question of whether stakeholders can reliably use the information therein for decision making.

However, the IAASB envisages a shift in the role of the auditor: from primarily a provider of assurance on information disclosed by entities to an originator of information about those entities, and a guide to help users navigate through the complexity of financial statements.

The strength of the IAASB's positioning on this matter presents the quandary of an opportunity for genuine change, together with considerable risk. Helping users to navigate complex financial statements is a noble aim, which plainly requires knowledge of users' needs and purposes. But how intimately can auditors be expected to understand the needs of individuals among increasingly diverse groups of stakeholders? Reaching too far without a sufficient regulatory and conceptual groundwork to underpin a changed auditor reporting model could exacerbate the issue of complexity.

It is germane to consider the auditor's role in the context of changing reporting models - including developments in International Financial Reporting Standards and steps toward an integrated reporting framework - both of which are tackling similar issues to those raised in the paper.

The IAASB has published a broad spectrum of views on the auditor reporting proposals: from support to clear opposition. There are some surprises in the names represented on both sides of the argument - a welcome shake-up and clear departure from a sense of group-think and attachment to the status quo.

There is great opportunity to enhance the value and relevance of audit through the bold steps that the IAASB are taking. It is almost a certainty that there will be widely divergent views, concerns and a raft of teething issues. As Michel de Montaigne famously said, however, "There is no conversation more boring than the one where everybody agrees".

Top Content

    Addressing tax challenges and the digitisation of the economy

    As the economy becomes even more globalised through digital sources, the tax systems currently in place need to be scrutinised to examine whether they are still fit for current and emerging business models. Joe Pickard reports on the OECD’s approach to this issue.

    read more

    Primary financial statements: a game changer in reporting?

    International Accounting Standards Board chair Hans Hoogervorst delivered a speech at the Seminario International sobre NIIF y NIF, organised by the Consejo Mexicano de Normas de Información Financiera in Mexico. The Accountant presents the highlights.

    read more

    FASB readies standards for the netflix generation

    The US Financial Accounting Standards Board (FASB) has updated its accounting standard for entertainment, with a specific eye on keeping up to date with how episodic content, such as television programmes, is consumed in the modern world. Jonathan Minter reports.

    read more

    Brexit: why it takes two to tango

    Former TA editor Vincent Huck, now editor of Insurance Asset Risk, looks at why Brexit might unleash geopolitical intrigue in Europe’s accounting standard-setting scene – and why IFRS 17 will be an incredible source of opportunity for firms in the coming years.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.