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August 11, 2017

ICAEW release report on extended audit report

By Stephanie Wix

The Institute of Chartered Accountants in England and Wales (ICAEW) has released a report highlighting the challenges and risks of extended audit reports across sectors.

The extended audit report: the start of a conversation, looks at the extended auditor report which has been implemented in the UK since 2013 and whereby auditors have to report on key audit matters (KAMs).

In particular the report looked at the risks affecting the sectors of business services, contracting construction, investment management, manufacturing, real state and retail using data from the Deloitte survey of 2016 with year ends June 2016. The sectors where the majority of companies disclose more risks were business services where 36% disclosed three risks, contracting constructions 36% disclosed 4 risks, and retail where 25% disclosed 4 risks. Companies disclosed up to 7 risks in some cases for the sectors.

The areas where companies found the risks to be were mostly revenue and the carrying value of good will or intangibles, revenue and taxation across the sectors. Manufacturing also found taxation and pensions, as well as accounting for acquisitions and inventory to be important areas of risk. The retail sector also had risks in inventory, and real estate raised concerns in valuation of property and accounting for acquisitions

The full report can be found here.

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