ISA (UK) 701 introduces changes to key audit matter disclosures in the auditor’s report relating to materiality. Louise Sharp, Manager in ICAEW’s Audit and Assurance Faculty, provides a reminder of the new requirements.
ICAEW Insights on audit and coronavirus
This month’s top technical stories on ICAEW Insights include news on the fourth self-employed grant, new EU sustainability disclosure rules and how auditors can report on irregularities, including fraud.
The European umbrella body has stressed the need for a more holistic approach to tackling fraud, following concerns that a disproportionate focus on auditors will do little to reduce the ever-growing risks.
An extra four months was not sufficient as the NAO reports that 55% of local authorities’ March 2020 accounts had not received an audit opinion by the revised deadline of 30 November 2020.
With the prevalence of COVID-related fraud, auditors are under pressure to be thorough when assessing material fraud. With remote audits, this is a particular challenge.
16 February 2021: The double whammy of Brexit and COVID has prompted an important focus on approaches to audit that could prove beneficial to auditors and clients alike.
10 February 2021: Reporting season might have been complicated by COVID but, says Joe Scaife, Head of Audit and Assurance at Bishop Fleming, you can achieve the same objectives in different ways.
1 February 2021: The Financial Reporting Council and the Financial Conduct Authority have published updated guidance for companies and auditors to ensure high-quality financial information continues to flow to users to support decision-making.
29 January 2021: With a high level of fraud predicted as a result of a COVID “perfect storm”, a new guide by ICAEW’s Audit and Assurance Faculty reminds auditors of their key responsibilities and highlights specific areas for discussion among engagement teams.
28 January 2021: Bob Neate is Head of Audit at Mazars. He says that despite the challenges of sequential lockdowns, auditors are there to protect stakeholders and clients, even when difficult questions must be asked.
4 January 2021: ICAEW’s Technical Advisory Service answer some of the most frequently asked accounting and auditing issues.
4 January 2021: Audit Wales has issued reports on the 2019-20 Welsh government accounts, extra funding provided to NHS Wales, and progress against equality objectives.
16 December 2020: The latest guide from ICAEW’s Audit and Assurance Faculty reminds auditors what to consider when determining audit materiality.
14 December 2020: Auditors are facing a perfect storm of standards and uncertainty this reporting season, from remote auditing to going concern.
8 December 2020: Sir Jon Thompson, Chief Executive of the Financial Reporting Council, answers questions on how the FRC has responded to the challenges of COVID-19, progress in audit reform, and the attractiveness of the audit profession.
Forced into remote working, with little peer support, and unable to visit client sites auditors are facing a new set of challenges.
If the government launches its consultation before Christmas a major reform agenda will come in the first quarter of 2021, says Michael Izza
25 November 2020: A review by FRC into audits conducted for 2019/20 year ends found that auditors had taken on board enhanced policies and procedures for assessing going concern.
16 October 2020: The Financial Reporting Council’s Jon Thompson spoke about the drivers for and progress in audit reform, the attractiveness of the profession and the challenges of COVID-19.
7 September2020: Initial estimates have found coronavirus-related fraud could end up costing the taxpayer £4bn.
6 August 2020: Coronavirus may lead to situations where an auditor considers including an emphasis of matter paragraph in the auditor’s report.
28 July: Alison Kitchen, Chairman of KPMG Australia, says that audit teams are managing the challenges of remote audit admirably.
17 July: Widespread changes in audit practices driven by COVID-19 have accelerated trends already underway in the market.
Interim reporting by listed companies will be of particular interest in 2020 to a range of stakeholders, including investors and other users of company accounts who want to understand the impact of COVID-19 on business performance and prospects. This guide developed by ICAEW’s Audit and Assurance Faculty is designed to help users to better understand the role of auditors in relation to such interim reports.
26 June 2020: ICAEW CEO Michael Izza explains the importance of going concern for auditing the effects of COVID-19, and how the Institute is supporting members with new resources.
Financial statements are prepared on basis that a business will continue to operate for the foreseeable future ie, that it is a going concern. Our guidance outlines who is responsible for ensuring that the going concern basis is appropriate, offers practical advice on how to make this assessment, and explains the implications for the accounts.
Auditors test the appropriateness of the use of the going concern basis for financial statements. Our guidance outlines auditor responsibilities for testing going concern, offers practical advice on testing, and explains the implications for the audit report.
26 May 2020: In light of the continuing economic uncertainty caused by the coronavirus pandemic, ICAEW has published guides on going concern considerations for those preparing accounts and on reverse stress testing.
14 May 2020: The Charity Commission has confirmed that it will be conducting an ongoing review of the reporting of matters of material significance by auditors and independent examiners.
11 May 2020: ICAEW’s Audit and Assurance Faculty has produced a webinar looking at accounting for and auditing revenue during COVID-19