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FEE agrees that the changes introduced by the recently completed auditor reporting project, and in particular changes in the auditor’s report concerning Key Audit Matters (KAM) and going concern, should be reflected in ISA 800 and 805.
In general, FEE supports the proposals included in the ED, but highlights the risk that the interaction between matters included in the auditor’s report on the complete set of financial statements, and that under ISA 800 or 805, might not be clear particularly in relation to KAM. To safeguard against this, FEE recommends additional clarification in the application material or additional examples to emphasise the linkage.
In addition, there is an apparent mismatch in the respective responsibilities regarding going concern. As included in illustration 3 to ISA 805, the illustrative report only refers to the responsibilities of the auditor and no reference is made to those of management. Whilst the illustration refers to the applicability of ISA 570, the wording in the auditor’s report may appear excessive in respect to the auditor’s work in relation to a schedule of accounts receivable. FEE believes that a more balanced approach needs to be taken, and both the auditor’s and management’s responsibilities should be included as per illustration 1.
With regard to the inclusion of a revision to ISA 810 as part of this project, FEE believes that, primarily for consistency reasons, engagements in which this standard is being used, however rare, should be performed subject to the same enhancements resulting from the new and revised auditor reporting standards. FEE would therefore favour consequential amendments to extant ISA 810. Nevertheless, the IAASB may consider that for non-English speaking countries that are obliged to ensure translations of ISAs, the benefits of any changes to ISA 810 would have to outweigh the likely unnecessary costs.