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February 14, 2011

APB issues ISA 700 revision

The UK Auditing Practices Board (APB) has revised its description of the scope of an audit, amending the auditor’s responsibility.

The APB has amended the short form description of the scope of an audit, referring to the auditor’s responsibility under ISAs to read all financial and non-financial information in the annual report, to identify material inconsistencies with the financial statements.

The description of the scope of an audit maintained on the APB’s website, which an auditor may choose to refer to in an auditor’s report,  has also been amended to be a generic description and can be applied to any entity.

“Investors and other users of annual reports regard the auditor’s involvement with the financial and narrative “other information” included with the financial statements to be of increasing importance,” APB chairman Richard Fleck said.

“The APB, has, therefore, amended the description of the auditor’s responsibility included in the auditor’s report to refer to the auditor’s obligation to read such other information with a view to ensuring that there are no material misstatements or inconsistencies between it and the financial statements”.

The standard, ISA 700: The Auditor’s Report on Financial Statements, and bulletin, Bulletin 2010/2: Compendium of Illustrative Auditor’s Reports on United Kingdom Private Sector Financial Statements for periods ended on or after 15 December 2010, have been revised to reflect the changes.

The revision of ISA 700 is effective for audits of UK entities for periods ending on or after 23 March 2011.

 

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