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SAICA welcomes new and revised auditing standards released by the IAASB

Last Updated Jan 2015

Johannesburg, Monday 19, 2015 The South African Institute of Chartered Accountants (SAICA) welcomes the new and revised Auditor Reporting standards released by the International Auditing and Assurance Standards Board (IAASB), stating that the standards will significantly improve auditors’ reports for investors and other users of financial statements. The IAASB is an independent standard setting board of the International Federation of Accountants.  The auditor’s report is the key deliverable of the audit and is the means by which the auditor enhances users’ confidence about the financial statements.

Following extensive research and in response to institutional investors and financial analysts’ request for more specific information to be reported in the audit report, the IAASB published new and revised auditor reporting standards. These standards are aimed at enhancing the communicative value of the auditor’s report by providing more relevant information about the audit that has been performed (i.e. providing engagement-specific information). The new standards are effective for audits of financial statements for periods ending on or after 15 December 2016. 

According to Willie Botha, SAICA’s Senior Executive for Assurance and Practice, the most notable enhancement is the new requirement for auditors of listed companies’ financial statements to communicate “Key Audit Matters” (KAM) - those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements of the current period. This introduces a new era in auditor reporting that will serve to enhance audit quality and the quality of financial reporting.

Julius Mojapelo, SAICA’s Project Director for Public Sector and Assurance, explains that in addition to KAM, the auditor report will now prominently place the audit opinion and basis for audit opinion sections at the top of the audit report. Furthermore the auditor’s report will include:

  • An affirmative statement about the auditor’s independence and compliance with other ethical requirements.
  • Enhanced auditor reporting on going concern which includes a description of management’s responsibility with respect to the going concern assumption, the auditor’s responsibility to evaluate management’s use of the going concern assumption and if the auditor concludes that a material uncertainty relating to going concern exists, this is reported in a separate section of the audit report.
  • Enhanced description of the responsibilities of the auditor.
  • The name of the engagement partner to be disclosed for audits of listed companies. The Code of Professional Conduct for Registered Auditors in South Africa stipulates a signing convention that already requires the disclosure of the engagement partner’s name.

SAICA through its Assurance Guidance Committee provided comments on the Invitation to Comment and Exposure Drafts that were issued as part of the process of developing the new auditor reporting standards.

Mojapelo advises that, “auditors should appreciate that these standards require timely attention since apart from the report itself, the changes will have an impact throughout the audit process and in particular the auditor’s interaction with those charged with governance (for example, Board of Directors, Audit Committee, etc.)”

 

MEDIA CONTACTS:

Dikeledi Mogorosi
Communications Coordinator: Corporate
SAICA Communications & Marketing Division
Tel: 011 621 6712
Email: dikeledim@saica.co.za

Nkolola Halwindi
Project Director: Communication
SAICA Communications & Marketing Division
Tel: 011 621 6713
Email: NkololaH@saica.co.za