The Center for Audit Quality (CAQ) has released a tool outlining the requirements that audit committees should consider in the adoption of the new auditors report.
The tool The Auditors Report: Considerations for Audit Committees explains the changes to the auditor’s report such as the disclosure of audit tenure and the communication of critical audit matters (CAMs). These changes will be implemented in phases and the tool provided a timeline of the implementation process.
The tool also presents 15 frequently asked questions, which included six questions from audit committee members flagged by the National Association of Corporate Directors (NACD).
The changes to the auditors’ reporting model are a result of the Public Company Accounting Oversight Board’s (PCAOB) June 2017 adoption of a new auditing standard The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion.
CAQ executive director Cindy Fornelli said: “The new requirements are the first significant changes to the auditor's report in decades. This CAQ tool is part of the profession's commitment to a smooth transition to the new model for preparers, auditors, audit committees, and investors."
Fornelli added that although significant changes will not take effect until 2019, audit committees should begin discussions with auditors and management.