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Auditing Assignment | New Reporting Standards

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Added on  2020-04-01

Auditing Assignment | New Reporting Standards

   Added on 2020-04-01

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Running Head: PCAOB’s introduction of New Reporting StandardsNEW STANDARDSON AUDITREPORTING
Auditing Assignment | New Reporting Standards_1
PCAOB’s introduction of New Reporting Standards1Key changes in the reporting requirements of the audit reportPublic Company Accounting Oversight Board is the regulatory body which is in existence to regularise the auditors of public companies. PCAOB adopts the new auditing standards on time to time basis as per the requirements of the changing market environment. It has announced the new auditing standards recently in order to widen the scope of audit reporting done by the auditors as a part of their audit engagement. The new standard aims at enhancing the quality of audit reports and making the reports more informative so as to raise the authenticity of the audit report in the eyes of intended users. Along with the previous reporting requirements PCAOB has directed the auditors of public companies to provide the additional information relating to the critical audit matters of the entity. Critical audit matters are those matters in which auditor has to apply subjective professional judgements during the audit engagement and requires communication of such matters to the audit committee (Christensen, Glover & Wolfe, 2014). Also, the auditors conducting the audit under the standards prescribed by the PCAOB are required to disclose in the audit report, their audit tenure i.e. the date from which they have started giving professional services to the company on a consistent basis. PCAOB has introduced a new format to report and the changed format demands the auditors to state the fact that auditors are independent parties and hence their opinion is not influenced by any external factors (Ning Chiu, 2017). Auditors are also required to incorporate a new phrase in the audit report starting with the words as ‘’whether due to frauds and errors’’ while describing their responsibilities in relation to provision of reasonable assurance about the true and fair view of financial statements. While reporting the critical audit matters auditors are also subjected to describe the considerations that enabled
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PCAOB’s introduction of New Reporting Standards2them to identify the matters as critical and the manner in which such critical matters are dealt with.Similarity and Differences between the IAASB & PCAOB’’s audit reporting approachesThe International Auditing and Assurance Standards Board (IAASB) & Public company accounting oversight board (PCAOB) pursues almost similar approaches to enhance the reporting requirement for the auditors as both the regulatory bodies are aimed to promote greater level of transparency in the financial reports of the company. The auditors are required to report on the key audit matters and the critical audit matters of only current financial year as per both the boards. Key audit matters are defined by IAASB as the matters holding high significance in the overall audit and are necessary to be reported to the investorsto draw their attention. These matters requires communication with those charged with governance about the key concern. Whereas the critical audit matters are defined by the PCAOB. Even after the having the similar objectives in relation to auditing practices, the approaches followed by both the boards varies in terms of documentation requirements and other areas (IAASB, 2017). IAASB requires the auditors to document the matters which had seek auditors attention and the logical reasons for the determination as to whether a particularmatter arising of audit is key audit matter or not. However, PCAOB sets out the requirement of identifying and reporting all the matters that were communicated to the company’s audit committee no matter whether they were determined as critical audit matters or not. Further, PCAOB restricts the auditors to communicate to the critical audit matters in the cases where adverse opinion is being expressed (PCAOB, 2017). On the other hand, IAASB permits the auditors to communicate the key audit matters even when the auditor expresses adverse opinion. But in case where disclaimer of opinion is being provided by the auditors both
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