The International Auditing and Assurance Standards Board has release its revised International Standards on Auditing to provide more focus on financial statement disclosures.
The revised standard, Addressing Disclosures in the Audit of Financial Statements, aim to focus auditors more explicitly on disclosures throughout the audit process and drive consistency in auditor behavior in applying the requirements of the International Standards on Auditing.
As a complement to these revisions, IAASB staff has also developed a companion publication for auditors that describes financial reporting disclosure trends and their possible implications from an audit perspective and highlights how the ISAs as revised guide the auditor in addressing disclosures.The IAASB operates under the auspices of the International Federation of Accountants.
The publication is intended to provide more consistent application of the standards when addressing disclosures as part of an audit of financial statements, and may be particularly relevant to small and medium practices implementing the changes to the ISAs.
“Understandable and relevant disclosures are essential to users of financial statements, and the focus has shifted to providing more qualitative information in the disclosures,” said IAASB chairman Arnold Schilder in a statement. “Increased auditor attention to disclosures is therefore in the public interest. We will continue to collaborate and coordinate with the accounting standards setters as they consider how to best improve financial statement disclosures and make them more effective.”
“Addressing the information included in disclosures is an integral part of the audit, regardless of the financial reporting framework under which the financial statements have been prepared,” said IAASB TECHNICAL DIRECTOR Kathleen Healy. “The IAASB firmly believes these changes to the ISAs will enhance audit quality and are capable of being applied proportionately in audits of entities of all sizes, and in all jurisdictions and sectors.”
The revisions to the standards encompass changes to 10 ISAs and conforming amendments to five other ISAs. They will be effective for audits of financial statements for periods ending on or after Dec. 15, 2016, in line with the effective date for the new and revised Auditor Reporting standards and ISA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information.
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