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ICAEW updates audit report wording guides

Author: ICAEW Insights

Published: 15 Sep 2021

The Audit and Assurance Faculty at ICAEW has updated five of its popular audit report wording guides to reflect changes to auditing standards.

The guides (20 in total) are available here, and help members by explaining changes that are required to auditor’s reports for modifications and in other situations, such as where there is a material uncertainty relating to going concern, or where the accounts have been prepared on a basis other than going concern.

The guides which have been updated are:

The updates were made to reflect changes to ISA (UK) 700 (Revised November 2019) Forming an opinion and reporting on financial statements; revised ISA (UK) 570 (September 2019) Going Concern; and changes to wording around preparation of financial statements before and after the Brexit date. 

The changes to auditing standards were previously flagged in the faculty’s February 2021 article, A reminder of changes to audit report wording. These guides primarily show changes that are required to standard auditor’s report wording, so it is worth referring to this earlier article as a reminder of how the revised auditing standards affect ‘clean’ auditor’s reports.

Those changes included:

  • A change in ISA (UK) 570 (Revised September 2019) to ‘positive’ going concern conclusions in the auditor’s report – for example, ‘we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate’, and ‘we have not identified any material uncertainties…’.
  • Additional requirements in ISA (UK) 570 for auditors of larger entities - the auditor is required to include an explanation of how the auditor evaluated management’s assessment of the entity’s ability to continue as a going concern.
  • ISA (UK) 700 (Revised November 2019) - a new requirement for the auditor’s report to explain to what extent the audit was considered capable of detecting irregularities, including fraud.

The FRC also issued an updated Bulletin: Illustrative Auditor’s Reports on United Kingdom Private Sector Financial Statements on 24 August 2021, which includes updated references to legislative changes post the EU exit transition period.

Audit and Assurance Faculty guides