23 May 2016

IAASB commented on US PCAOB’s efforts to enhance the auditor’s report

The IAASB welcomes the release by the PCAOB of its re-proposed auditing standard, The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion.

The PCAOB’s reproposal would require auditors conducting audits under PCAOB standards to provide information on critical audit matters (CAM) in the auditor’s report, in addition to other enhancements.

In September 2014, the IAASB finalized its new and revised Auditor Reporting Standards, which will be effective for December 2016 year-end audits. The IAASB’s most notable enhancement is the communication of Key Audit Matters (KAM) for listed entities.

“The IAASB is delighted to see the many similarities between the PCAOB’s reproposal and the IAASB’s standards. Comparable approaches to auditor reporting around the world will clearly benefit investors and is in the public interest. We commend the PCAOB for taking steps to enhance transparency for investors and to further global consistency,” said Prof. Arnold Schilder, IAASB Chairman. “We have heard from early adopters around the globe that enhanced communication in the auditor’s report has reinvigorated discussions with management and audit committees and inspired auditors to be innovative in their auditor’s reports.”

The IAASB’s Auditor Reporting Implementation Working Group (ARIWG)has prepared a publication, The New Auditor’s Report: A Comparison between the ISAs and the PCAOB Reproposal, to assist interested parties in understanding key aspects of the two proposals. Dan Montgomery, Chair of the Working Group, noted, “It is beneficial that both the IAASB and PCAOB approaches look to communications with those charged with governance as the starting point to determine matters for inclusion in the auditor’s report, as investors have long asked for greater transparency about the types of matters that are discussed with the audit committee. While the two approaches may differ somewhat in terms of definitions and the decision-making process, we believe that many of the same types of matters will ultimately be communicated.”

Kathleen Healy, IAASB Technical Director, highlighted, “The IAASB devotes much attention to outreach and coordination with the PCAOB and other regulators and standard setters, as well as with a variety of other important stakeholders, including investors and firms. This reflects the importance we attach to achieving auditing standards that can be applied consistently in a complex, evolving global environment, and facilitates convergence.”

Full press release

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