Changes to our audit reports

The new auditor reporting standards are designed to enhance the independent auditor’s reports for investors, governance and other users of financial statements/performance report. They apply for balance dates on or after 15 December 2016.


We are writing to share the important news on the changes in the auditor reporting standards and how they will affect you. This is the most significant change in the auditor reporting framework in decades. Please share this with all those involved in your audit process.

The new auditor reporting standards are designed to enhance the independent auditor’s reports for investors, governance and other users of financial statements/performance report. They apply for balance dates on or after 15 December 2016.

The IAASB (the international body who develops auditing standards) states that the intended benefits of the new auditor reporting standards are:

  • Enhanced communication between auditors and investors, as well as those charged with governance
  • Increased user confidence in audit reports and financial statements/performance report
  • Increased transparency, audit quality, and enhanced information value
  • Increased attention by management and financial statement preparers to disclosures referencing the auditor’s report
  • Renewed auditor focus on matters to be reported that could result in an increase in professional scepticism
  • Enhanced financial reporting in the public interest.

 

Change in the presentation of our auditor’s report

The main change is that the opinion is now at the top of the report, this is followed by the basis for opinion, then responsibilities of governance and responsibilities of the auditor. We are also required to now report on other information included in the annual report.

The changes in the look of the auditor’s report are summarised in our latest newsletter, http://www.moorestephens.nz/a-change-in-the-format-of-your-audit-report/

 

Information other than the financial statements/performance report and our auditor’s report

Apart from the change in the presentation of the audit report, we now have specific responsibilities to read and report on other information which is published in an annual report. Our auditor’s opinion does not cover the other information, however, if we have nothing to report in respect of the other information, we are required to state this. Further, if there is an uncorrected material misstatement of the other information, we are required to describe the nature of the uncorrected material misstatement.

Other information is defined as information (financial and non-financial) in an entity’s annual report other than financial statements/performance report and the auditor’s report. (See ISA (NZ) 720 (Revised) “The auditor’s responsibilities relating to other information” for more)

The other information section of our auditor’s report will include:

  • A statement that management is responsible for the other information
  • A statement that the auditor’s opinion does not cover the other information and, accordingly, that the auditor does not express (or will not express) an audit opinion or any other form of assurance conclusion thereon; and
  • A description of the auditor’s responsibilities relating to reading, considering and reporting on the other information as required by ISA 720 (Revised).

If governance or management does not intend to publish any other information with the financial statements/performance report, we will not be required to report on this.

 

What we are required to do as part of our annual audit

  1. Determine, through discussion with management, which document(s) comprises the annual report, and the entity’s planned manner and timing of the issuance of such document(s)
  2. Make appropriate arrangements with management to obtain in a timely manner and, if possible, prior to the date of the auditor’s report, the final version of the document(s) comprising the annual report; and
  3. When some or all of the document(s) mentioned above will not be available until after the date of the auditor’s report, request those charged with governance to provide a written representation that the final version of the document(s) will be provided to the auditor when available, and prior to its publication by the entity, such that the auditor can complete the procedures required by this ISA (NZ).

 

We therefore ask that you:

  • Advise us at the commencement of the audit what other information will be published with the annual report
  • Ensure that other information is made available to us on a timely basis; and
  • Provide us with the draft and final copies of the annual report

 

In the meantime, please contact us if you have any questions on this. We look forward to working with you to implement these changes.

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