ACCG925 Individual Assignment: Comparing Audit Reporting Requirements

This report analyzes the key changes in audit reports, focusing on the similarities and differences between the reporting requirements of the International Auditing and Assurance Standards Board (IAASB) and the Public Company Accounting Oversight Board (PCAOB). The report examines the new audit report formats, including the treatment of going concern and the inclusion of key and critical audit matters. It then explores the motivations behind these changes, particularly their aim to provide users with more detailed and relevant information. The report critiques whether these changes are likely to achieve their objectives, considering the impact on audit practice, including disclosures related to going concern, and the communication between those charged with governance and auditors. The report concludes by outlining the practical implications of these changes for auditors and the overall financial reporting landscape, drawing upon relevant academic sources.

ACCG925 – Individual Assignment Template
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First Name:
Student ID:
Lecturer Name:
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Contents
Part A : The key changes to audit report. With focus on the similarities as well as any
differences between PCAOB and the International Auditing and Assurance Standards Board
(IAASB) auditing reporting requirements.................................................................................3
Part B : Explain the reasons/motivation for the changes and critique whether these changes
are likely to achieve their aims...................................................................................................5
Part C : Outline the likely impact of the audit reporting on audit practice................................6
References..................................................................................................................................7
Bibliography...............................................................................................................................7
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Part A:
The financial statement of the company should be prepared to keep in mind that they give a
true and fair view of the financial position of the company (Deloitte, 2016). The IAASB and
PCAOB provide the different format of audit reports. The matters presented in the audit
report format provided by IAASB and PACOB are as follows:
IAASB PACOB
The new audit report will be effective from
the calendar year 2016
No effective date has been provided by the
authorities.
All companies are covered under this new
audit report format.
This audit report format will cover only
public companies.
The concept of going concern gets affected
by the new audit report format. If the
company has undergone any major event
due to which the future of the company is
uncertain than the going concern of the
company will be re-evaluated.
This audit report format does not affect the
going concern principle of the company.
The format of the audit report is laid down
by the IAASB.
The PACOB has not given any specific
format of the audit report.
The audit report as per IAASB should List of any other statement to be attached to
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include the ethical requirement such as a
certificate of the expert whose work is
used in the audit and certificate of
auditor’s independence (Cullinan, et. al.,
2012).
the report is not mentioned by the PACOB.
Despite many differences, there are certain similarities in the New Audit Report of the
IAASB and PACOB.
1. The “Key Audit Matters” and the “Critical Audit Matters” are same in practical
meaning but reported with a different name in the audit reports.
2. In both, the report the opinion section comes first followed by the basis of opinion in
the second paragraph.
3. Both the audit report format contains a separate section for clearing the fact the
preparation of the financial statement is the responsibility of those charged with
governance and the duty of the auditor is to give an opinion.
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Part B:
As per the IAASB standards, the KAM is required to be stated by the auditor while auditing
the financial statement of the public listed companies. The entities other than public entities
do not contain any such requirement to state the KAM for their Audit Report.
The changes implemented the presentation of the Audit Report by the IAASB and PACOB is
done with a view to achieving the objective behind the preparation of the audit report by the
auditor. The new audit report format provides the users with more detailed information about
the company for making its decision (IAASB, 2016).
The new format of the Audit Report, list the Key Audit Matters and Critically Audit Matters
in its Report differently which are very important for the users as they are the material
matters of the financial statement of the company (Burns and Fogarty, 2010). Further, if
there have been any major events in the financial year which can affect the future existence of
the company that the going concern concept can be ignored by the management of the
company. Therefore it can be said that the new format of the audit report is providing better
and brief opening about the statement of the company whose audit report is prepared and
achieving the objective behind the preparation of audit report.
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Part C:
The audit reporting is the presentation of the audit conducted by the auditor on the financial
statement of the company. The audit report gives an opinion about the financial statement of
the company based on the sufficient evidence obtained by auditor after applying appropriate
procedure. The new audit report will cover the material points of the audit report and
highlight it so that it can be easily identified by the users. The new Audit Report format
provides the necessary documents to be attached to the audit report for a better understanding
of the Audit.
The relevant authorities present the audit report format keeping in mind that the important
information should be presented first. The audit report should be prepared by the auditor with
due diligence and by applying professional skills. The audit report gives the opinion to the
users of the report about the true and fair view of the financial position of the company and
its affairs (IFAC, 2017).
Impacts of new Audit Reporting requirements on audit practise:
 New audit reporting requirement affects Going concern disclosures in the auditor’s
report.
 New audit reporting requirement also affects TCWG and Management of the
company in various ways i.e. strong communication between TCWG and the auditors
on the KAM and increase in the attention by TCWG to the financial statement
disclosures referred in the report of the auditor.
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Bibliography
Burns, J. and Fogarty, J., 2010. Approaches to auditing standards and their possible impact on
auditor behavior. International Journal of Disclosure and Governance, 7(4), pp.310-319.
Cullinan, C.P., Earley, C.E. and Roush, P.B., 2012. Multiple auditing standards and standard
setting: Implications for practice and education. Current Issues in Auditing, 7(1), pp.C1-C10.
Deloitte, 2016. IAASB publishes comparison with PCAOB auditor reporting proposal.
[Online] Available at: https://www.iasplus.com/en-us/news/2016/05/iaasb-pcaob-compare-
report [Accessed 21 September 2017].
IAASB, 2016. The New Auditor’s Report: A Comparison between the ISAs and the US
PCAOB Reproposal. [Online] Available at:
https://www.shinnihon.or.jp/shinnihon-library/publications/issue/us/gaap-weekly-update/
pdf/GAAP-2016-06-14-01.pdf [Accessed 21 September 2017].
IFAC, 2017. IAASB Welcomes PCAOB's New Enhanced Auditor Reporting Standard.
[Online] Available at: https://www.ifac.org/news-events/2017-08/iaasb-welcomes-pcaobs-
new-enhanced-auditor-reporting-standard [Accessed 21 September 2017].
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