A change in the format of your audit report

For organisations with balance dates on or after 15 December 2016, you will notice a change in the format of your audit report. This is due to a change in the international auditing standards governing audit reports.

According to the IAASB, the body that writes the international auditing standards, (which are then implemented in New Zealand by the XRB/NZAuASB), the intended benefits of the new audit report format are as follows:

  • Enhanced communication between auditors and investors, as well as those charged with governance
  • Increased user confidence in audit reports and financial statements
  • 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.


Changes to the audit report for all organisations include:

  • Moving the opinion section, the most important part of the report, to the top of the report
  • Including a new ‘basis for opinion’ section
  • Specifically mentioning in the audit report that assessing going concern is a responsibility of governance
  • Cross-referencing auditor’s responsibilities to the XRB’s website, click here
  • Disclosing the name of the engagement partner for issuers and FMC reporting entities considered to have a higher level of public accountability.


Key Audit Matters

Following the basis for opinion section, organisations that are listed issuers will notice an additional section in their audit report, called Key Audit Matters. This section will also be in the audit reports of FMC reporting entities considered to have a higher level of public accountability for periods ending on or after 31 December 2018.

According to the new auditing standard ISA(NZ) 701, Key Audit Matters (KAM) are those matters that, in the auditor’s professional judgement, were of most significance in the audit of the financial statements of the current period. KAM are selected from matters which are communicated with the organisation’s governing body.

The description of each KAM in the Key Audit Matters section of the auditor’s report shall include a reference to the related disclosure(s), if any, in the financial statements and shall address:

  1. Why the matter was considered one of most significance in the audit and therefore, determined to be a key audit matter; and
  2. How the matter was addressed in the audit.


If your organisation requires KAMs to be in the audit report, during the audit we will discuss with you what KAMs we will include.
If you have any questions about the new format of the audit report please get in touch.

Summary of the changes in the format of the audit report

Audit Report Changes 2016
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