Brazilian institute of auditors (IBRACON) president Idésio Coelho commented that a survey by the institute confirmed that the new auditor’s report meets the growing desire from the users of financial statements for greater compliance, objectivity and transparency.
IBRACON conducted a survey focusing on Key Audit Matters (KAM), showing the advances of the New Auditor's Report. Key audit matters are defined by the International Auditing and Assurance Standards Board (IASB) as significant points in the financial statement audit.
Coelho commented on the findings in a blog post published on IFAC’s knowledge gateway website. He wrote: “The IBRACON survey confirmed our expectation that the New Auditor's Report would meet the growing desire from financial statement users and Brazilian society for a business environment with more compliance, objectivity, and transparency. This advance also confirms the role of the accountancy profession in contributing to audit process transparency and responding to auditor concerns.”
The survey evaluated auditors reports from 546 listed companies, including the top 100 on the Brazilian stock exchange, and in those reports 1,329 key audit matters were identified, an average of 2.4 per audit. Thirty two percent of the KAMs were related to impairment of non-financial assets, and the second most covered KAM was revenue.
According to the survey findings, in the audit report using the new standards, language is more accessible and must make communication with investors, creditors, and regulators more efficient; the presentation is more detailed; and the auditors' focus on areas with greater risk and subjectivity of analysis and his or her attention to the aspect of going concern became emphatic.
The survey also showed that 23% of audit reports included KAMs that considered the outcome of auditing procedures, which is allowed but not required by the standards, and 52% of entities include outcomes of the audit procedures in the KAM section.
The New Auditor's Report began taking effect in Brazil in 2017 for financial statements for the year ended 31 December 2016.
Coelho’s blog can be found here.