Auditing and Assurance Services - Assignment
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Added on 2020-03-28
Auditing and Assurance Services - Assignment
Added on 2020-03-28
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Running head: AUDITING AND ASSURANCE SERVICES1Auditing and Assurance ServicesStudent’s NameUniversity’s Name
AUDITING AND ASSURANCE SERVICES2Key ChangesThe key changes that have been adopted by PCAOB in order to enhance theusefulness as well as the relevance of the report of auditor through providing important andadditional information to the investors. According to the new standard, critical audit matters(CAMs) need to be discussed in the auditor's report and these matters are required tocommunicate to audit committee[ CITATION Nei17 \l 1033 ]. These are related to thedisclosure or the accounts that are important for the financial statement. In the new standard,the report of auditor will disclose, among the other things and an auditor's tenure. Theinvestors will be allowed to have to view the audit and also provided with the usefulinformation for the purpose to make the important decisions[CITATION Pca17 \l 1033 ]. Differences between the PCAOB and the International Auditing and AssuranceStandards Board (IAASB) Audit Reporting RequirementsThe approaches that are taken by IAASB and PCAOB for the purpose of enhancingthe report of auditor are similar. The approach is used in order to provide transparency in ahigher proportion, to the investors and others as well, that is related to the matters of auditand establishing the two-way communication during the process of audit with TCWG. DifferencesIn case of IAASB standard, description of KAM for the related disclosure should address: why matter is significant in audit? and how matter was addressed in audit? However,in case of PCAOB reproposal, for every CAM that is communicated, the auditor need to: identify CAM, describe the main considerations for determination of CAM, how it is addressed, and finally refer to financial statement accounts and the disclosure related to CAM. IAASB standard requires that the identification of ethical requirements that are related as well as independent of the auditor should be stated in a statement in Basis for Opinion 2
AUDITING AND ASSURANCE SERVICES3section, along with that, it should be also stated that the auditor has fulfilled all the ethical responsibilities. While PCAOB reproposal requires a statement in Basis for Opinion section as evidence that auditor is independent and is a registered public accounting firm with PCAOB included. IAASB standards requires disclosure of engagement partner’s name. On other hand in PCAOB, engagement partners as well as other accounting firms should be disclosed along with the audited entities. In both IAASB and PCAOB, the opinion section should be presented and after that Basis for Opinion selection. However, in case of IAASB, a different order may be followed if prescribed by law or regulation. In case of IAASB, the modification of the opinion by the auditor should be included in Basis for Opinion section while in PCAOB, opinion modification should be included in Opinion section. As per IAASBstandards, all the responsibilities related to the management, auditor's responsibility, features of audit should be described separately in auditor's report. Also, the paragraphs related to emphasis of matter as well as the other matter are also needed in certain circumstances. However, in case of PCAOB emphasis paragraph should be included. Also, standardized language enhancements should be described in PCAOB standards for acquiring the reasonable assurance.SimilaritiesThere are many similarities between PCAOB and the International Auditing and Assurance Standards Board (IAASB). Both PCAOB and IAASB used the similar approach for the enhancement by providing the high level of transparency to the investors and other as well as established the two-way communication which will take place between the investors and the audit committee during the process of auditing and making auditing report by the auditor. Both requires to identify the communication matters to be CAM or KAM and only for the current period. Both requires providing with the description of the matter for the 3
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