Numerous changes in International ISA's effective for the audits for the periods ending on or after 15 December 2016 have been issued, which includes:
- Changes in independent auditor's report format and contents.
- Key Audit Matters (KAMs') to be included in independent audit reports.
- Changes regarding qualifications, adverse opinion , disclaimer of opinion, other matters and emphasis of matter paragraphs
Independent Auditor's Report
Audit report had undergone major changes in the format and contents:
- Auditor's opinion shall be the initiate paragraph
- Enhanced description of auditor responsibilities and key features of the audit
- Responsibilities of those charged with governance are more robust
- A key inclusion of the statement about the independence and other ethical responsibilities
- Listed company audit reports would consist the engagement partner's name
- Enhanced reporting on going concern
- Key audit matters
Key audit Matters (KAMs) – applicable for listed companies
- KAMs are those matters that in the auditor's professional judgement, were of most significance in the audit of the financial statements of the current period.
- KAMs need to be included unless the law or regulation precludes or in extremely rare circumstances when there is adverse consequences
- KAM can be areas of higher assessed risk of material misstatement, significant judgement, effect on significant events or transactions
Though the changes may result to a lengthier audit report; these shall further enhance the quality of reporting and provide the user a detailed undestanding of the key risk areas.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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