Auditing and Assurance in Australia: PCAOB, IAASB Comparison

This report examines auditing and assurance practices in Australia, focusing on the key changes in audit reporting and comparing the standards set by the Public Company Accounting Oversight Board (PCAOB) and the International Auditing and Assurance Standards Board (IAASB). It discusses the motivations behind the changes, particularly those implemented by the PCAOB, and evaluates their potential to achieve the desired outcomes, such as improved information dissemination and enhanced understanding of audit reports. The report also outlines the likely impact of the new audit reporting requirements on audit practice, including the empowerment of the public and investment community with relevant information and the potential for addressing complexities in financial errors. The analysis covers similarities and differences between PCAOB and IAASB, emphasizing the importance of both bodies in regulating accounting practices and ensuring the quality of information. The report concludes that these changes are likely to achieve their aims by improving the quality of information and enhancing the effectiveness of auditing practices, leading to more pragmatic accounting and financial gains for institutions.

Running Head: AUDITING AND ASSURANCE IN AUSTRALIA 1
Auditing and Assurance in Australia
(Name)
(Institutional Affiliation)

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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.
This discussion will be based on the recent changes that were implemented by the
PCAOB in the manner in which audit reports are delivered with specific reference to the risks
involved in such transactions. One of the major risks is the liability of the auditors which is a
major concern. Besides, much emphasis will be laid on the comparison between the suggestions
of the PCAOB and the requirements of the IAASB where the differences and similarities will be
discussed. (Louwers, 2016)
The recent key changes that were instituted by the PCAOB included the provision of
information to the entrepreneurs and the intention was to improve their understanding of the
report provided by the auditors and the forthcoming importance of the same. The other additional
improvement upon the report was that it suggested a thorough discussion of the audit matters.
These are matters that border on the disclosure of the material facts as well as the financial
documentations whose subject matter may not be easily comprehensible owing to the complexity
of the financial matters as it was mentioned earlier. The new standards would require that the
period of tenure under which an auditor should serve in a company must be laid bare. This
involves information concerning the exact year when they began their service (Jha, 2013). The
requirements of the new changes indicate that the auditors must design a viable plan to address
the concept of whether the misstatements in the accounting records were carried out by virtue of
fraudulent acts or through erratic means. Nonetheless, the changes were to be effected in various
phases. This would allow the users of the reports ample time to consume the information while
the auditing companies would also be in a better position to cater for the critical issues that they

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have been tasked to perform. The period under effective implementation has been put in the
bracket between the year 2017 and 2020. (Hall, 2010)
It must be noted that all the changes suggested by the PCAOB do not apply to some
institutions. Apparently, companies in the category of new growth are not affected by the new
changes. Other parties include investment firms, dealers, brokers and other players that carry out
similar transactions as the aforementioned. Generally, the reception by both the public and the
investment community has been positive and there is optimism that the changes would transform
the auditing activities. Most importantly, the quality of information dissemination would be
improved through the new standards. (Chartered, 2015). The stakeholders of the PCAOB have
moved to assure the target groups who are expected to be affected by the changes. They believe
that such information would expose the risks faced by the auditors. Various quarters including
the media have been quick to respond to the impending risks to be faced by the auditors. They
hold that the auditors would bear most burdens that they should not be responsible for. (Jha,
2013)
As mentioned earlier, the IAASB also has a set of requirements in regard to the auditing
policies. Some of the requirements are similar to those of the PCAOB while a number of them
exhibit differences, although not extensively since the roles of both bodies are virtually
overlapping. The first similarity is that both institutions have policies that govern and reprimand
those parties that are charged with fraudulent acts in the accounting practices (Messier, 2012).
The policies suggest that criminals who engage in those activities be charged in the courts of law
for committing economic crimes. Both respect the international accounting standards and not the
subjective views as practiced in many nations. The major difference is that the PCAOB lays
more emphasis on the quality of information whereas the IAASB is conservative. It has been

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discussed before that the PCAOB has had to make changes about communication unlike the
IAASB. (Gay, 2012)
Explain the reasons/motivation for the changes and critique whether these changes are
likely to achieve their aims.
The motivation behind the changes made by the PCAOB can be attributed to the changes
in the nature of the business environment today. The dynamics demand for the reforms that must
be implemented to suit the current market. For instance, the tastes and preferences keep changing
and there must be adequate information to update the stakeholders. Another change that was
discussed was that the audit matters must be thoroughly dissected. The reason behind this is that
total quality is a virtue and it should be upheld at all costs (Leung, 2012).Therefore by all means,
these changes will achieve the intended aims because of their quality.
Outline the likely impact of the audit reporting on audit practice.
The new audit report has a massive impact on the audit practice because first of all, it will
empower the public as well as the investment community with relevant information. Through the
discussion of the critical matters in the auditing field, most of the loopholes would be sealed and
the accounting personnel will be able to execute their duties diligently. Complexities in the
financial errors would be solved through the newly instituted changes. (Gomez,2012). The future
of auditing is quite bright and more institutions will be able to make financial gains through
pragmatic accounting since the limitations are always being tackled.

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References
Chartered, A. A. (2015). Auditing. Milton, QLD: Wiley Australia.
Gay, G. E. (2012). Auditing and assurance services in Australia. North Ryde, N.S.W: McGraw-
Hill Education.
Gomez, C. (2012). Auditing and assurance: Theory and practice. New Delhi: PHI Learning.
Hall, J. A. (2010). Information technology auditing. Mason, Ohio: South-Western.
Jha, A. (2013). Auditing and assurance. New Delhi: Taxman Allied Services.
Leung, P. (2011). Modern auditing & assurance services. Milton, Qld: John Wiley.
Louwers, T. J. (2016). Auditing & assurance services. Cambridge
Messier, W. F. (2012). Auditing: A systematic approach. Boston, Mass: Irwin/McGraw-Hill.