The International Auditing and Assurance Standards Board has released a new consultation paper seeking views on how to enhance the quality, relevance and value of auditor reporting on an international basis.
The paper, Enhancing the Value of Auditor Reporting: Exploring Options for Change, seeks to determine whether there are common views among users of audited financial statements and other stakeholders about the usefulness of auditor reporting. It describes issues with current financial reporting, including a perceived “information gap,” identified by some stakeholders. It then sets out possible options for change and seeks input as to whether such options might be effective in enhancing auditor reporting and the communicative value of the auditor’s report.
The U.S. Public Company Accounting Oversight Board is also working on changes to the auditor’s reporting model. Earlier this month, the PCAOB’s new chairman, James Doty, told a group of accountants that it would be issuing a concept release later this summer outlining changes in the auditor’s report to make it more useful to investors (see New PCAOB Chairman Pushes for Audit Overhaul).
“The auditor communicates to financial statement users primarily through the auditor's report,” said IAASB Chairman Arnold Schilder in a statement. “Over the past several years, the IAASB has developed International Standards on Auditing addressing auditor communication and reporting with the aim to address the expectations gap and, more recently, to promote international consistency in auditor reporting. The IAASB believes that now is the time for a more fundamental review of auditor reporting to ensure, in the public interest, that it can meet the information needs of financial statement users in a global business environment with increasingly complex financial reporting requirements.”
The IAASB is also seeking information about the potential implications of changes in auditor reporting, as well as about possible implementation challenges. The paper recognizes that not all of the options explored are able to be implemented by the IAASB on its own—some would require collaboration with national standard setters, regulators and/or legislators to develop or implement.
“This consultation is aimed at gathering views from around the world to inform the IAASB about whether there is consensus about the need to enhance auditor reporting and, if so, how an enhanced model might be achieved,” said IAASB technical director James Gunn. “Investors and financial analysts have signalled to us they want additional, and more pertinent, information for their decision making. The IAASB wants to better understand these views as well the views of others, including users of audited financial statements of small- and medium-sized entities and public sector organizations, preparers, auditors and other key participants in the financial reporting process.”
The IAASB, which operates under the auspices of the International Federation of Accountants, is inviting all stakeholders to respond to its consultation paper. To access the consultation paper or submit a comment, visit the IAASB’s Web site at www.iaasb.org/ExposureDrafts.php. Comments on the consultation paper are requested by Sept. 16, 2011.
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