The South African Institute of Chartered Accountants (SAICA) has published a report providing an overview and analysis of the first batch of auditors’ reports issued in compliance with the new and revised auditor reporting and related auditing standards.
In South Africa, the Big Four have been early adopters of the standards and so far have issued auditor reports for nine listed entities. In its overview, SAICA found that the changes made the auditors’ report more transparent and informative.
In particular, SAICA highlighted the communication of key audit matter (KAM) as a prominent change with respect to transparency and enhanced information. KAM are the matters that were of most significance in the audit according to the auditors’ professional judgement.
There were 30 KAM communicated in the first nine reports. While the KAM subject reported was different by each entity, the most common ones were related to the valuation/impairment of goodwill and intangible assets, the valuation of property plant and equipment, and deferred taxation and income tax.
SAICA senior executive for assurance and practice Willie Botha summarised: “The auditor’s report is more informative and transparent about the audit that has been performed. It enables a better understanding by the users of financial statements of the auditor’s responsibilities, work effort and the outputs of the audit process as well as an enhanced perspective about the audited financial statements. The relevance and value of the external audit are enhanced by adding to users’ confidence in the entity’s financial reporting as well as the audit.”
SAICA’s early auditor adopter report can be accessed here.