ACCG925 Auditing & Assurance Services
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Auditing & Assurance Services (ACCG925)
Added on 2020-03-23
ACCG925 Auditing & Assurance Services
Auditing & Assurance Services (ACCG925)
Added on 2020-03-23
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ACCG925 – Auditing & Assurance ServicesFamily Name:First Name:Student ID:Lecturer Name:Time and Day of the seminar:The key changes to audit report. With focus on the similarities as well as any differencesbetween PCAOB and the International Auditing and Assurance Standards Board (IAASB) auditing reporting requirements.The notable changes in the model of audit report of the U.S. Public Company Accounting Oversight Board (PCAOB) authorizes auditors to exhibit the critical Audit Matters (CAM) as an additional requirement. The purpose of the change in audit report standard was to make it more explanatory and put probable liability on auditors’ as it is argumentative in nature. The essence of CAM and its association with the auditor’s liability has varied complications. This is due to the fact that, as the participants tend to evaluate the liability of auditors (Gimber, Hansen & Ozlanski, 2016). It is necessary to conduct a comprehensive research on preliminary evidence to be aware of the major changes in audit report avoiding unwanted consequences. The experimentations help standard-setting process of PCAOB and aid the auditors to adjust with the potential changes. The auditor’s report is beneficial for generating rectified financial statements. On the other hand, International Auditing and Assurance Standards Board (IAASB) is constantly changing their way of audit reporting by analyzing responses from preparers, users, regulators, assurance firms and external audit (Simnett & Huggins, 2014). IAASB changes the audit reporting pattern with 1
the support of extensive research on stakeholder outreach, international research and public consultation (IFAC.org, 2015). Communicational gaps are revived between the investors and auditors along with other personnel of the governing body. Management with the assistance of the governing personnelis responsible to administer the declaration of financial statements with more sincerity. Auditors’ are assigned to note the high audit risk areas with transparency, which can help in benefiting the governing personnel during the rectification process. Auditor’s report assists the users to understand the financial performance in conformance with the entity’s management system. Key Audit Matters (KAM) is significant to judge high risk areas in the financial statements of current financial period of an entity. The PCAOB focuses on independent auditor’s responsibility to meet the interests of the investors and public by maintaining adequate norms related to the capital market and securities laws. In addition, it evaluates specific audit quality, performance, compliance, training, in relation with client retention and acceptance, independent standards and policy establishments (Gunny & Zhang, 2013). Critical audit matters are stated by assessing high audit risk areas and issues related to material misstatement (PCAOB, 2017). Financial statement estimations and the timing of transactions are the key areas that seek fine judgment of the auditors. There are a lot of similarities in advanced requirements of auditing reporting between the PCAOB and IAASB (PCAOB, 2017a)Explain the reasons/motivation for the changes and critique whether these changes are likely to achieve their aims.The changes in the PCAOB are to enable legitimate financial statements, which are authorized by strict auditors and generate strong interests to develop proper relationship between the investors and audit reports. The changes are adopted after several years of through research by the acknowledging investor advisory group, public comments, and 2
standing advisory groups of PCAOB (USA.gov, 2017). Updated audit reporting model is essential for understanding the complications and global operations of various companies. The growing issues of financial and market challenges, use of estimates and measurements make audit more unfair. There are situations, when an auditor helps to divert the challenging circumstances of a company by taking complex judgments. Auditor’s report has all the required elements that help the investors to perceive management functionality passively. Thechanges in the reporting structure help investigators to fulfill the asymmetry between the investors and financial management of an organization. An advanced report provides the investors the ability to critically examine and synthesize the growth of the company through its financial estimates. There will be a proper hint of unusual and high risk transactions in the changed model of audit reports authorized by PCAOB. The need for transparency is expectedto achieve higher benefits without getting itself engaged in economic crisis (Delloite, 2015). Refurbished model of the auditor’s report guide users to understand the company’s financial position rather than scrolling it to find pessimistic opinion by its performances. New audit facility offers audit committees a privilege to master greater insights by scrutinizing the audit quality in the case of same industry selections. Modern reports are going to ensure considerable involvement of management accountants as well as financial reporters to improve the refinement of data provided to the end users. This can help to eradicate the complexities between company regulators and the auditors. The objective of the improved form of auditing is to ensure enhance professional skepticism along with the on- going concerns and audit quality without compromising the sincere work effort of the company’s accountants (Nelson, 2009). Auditor’s report is resourced from financial system and the disclosures of the on-going issues allow better operations of financial reporting.3
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