Auditors communicate in a range of different ways with different stakeholders throughout the audit process. The quality of auditor communications has a direct impact on decisions made by the entity, the most obvious and well-known one being the statutory audit report.

It’s been more than a decade since the last major evolution of the audit report, when the Financial Reporting Council (FRC) introduced the long-form audit report. One of the aims was to provide a ‘hook’ for users of audit reports to engage with the company. 

This introduced, among other things, key audit matters, where auditors could expand on certain aspects of the audit opinion. This was an important development and enabled auditors to tell more of the story of the audit.

However, “the extended audit report, over time, has become somewhat business as usual,” says Jayne Kerr, Chair of ICAEW’s Auditor Reporting Lab Steering Group and Audit Public Policy Leader at PwC. 

Stakeholder feedback on audit reports highlights their increasing length and often boilerplate or overly jargonistic language. “In the Auditor Reporting Lab, we’re looking at what auditors can do to make audit reports more informative and user friendly, in the same ways as companies are looking to improve their annual reports and other corporate communications,” says Kerr.

The Auditor Reporting Lab Steering Group is working to help stakeholders better understand the audit report and where it sits in the wider scheme of corporate communications, highlight examples of innovations by firms in terms of design and language, and share indications of the direction of travel. 

Making reports more engaging

While there is a statutory requirement for specific language when it comes to the audit opinion, and many other aspects of the overall report, some elements, including the key audit matters, provide an opportunity for firms to innovate. 

This can include using more direct, accessible language. “Auditing standards rightly require us to frame many points carefully in the audit report,” Kerr explains. “But there are often many small, nuanced changes we can make to the wording to make our messages clearer and more readable without compromising those standards.”

While there are some limitations on what can be done with the language of the audit report, audit firms have more freedom with the design. Firms have introduced design elements such as graphs, diagrams and boxed callouts to make the report more engaging and digestible. This can involve coordination with the reporting entity to match the branding and styles of the entity’s annual report, Kerr explains. “For example, the colours we select for the audit report will reflect the brand colours of the entity.”

What do stakeholders want from the report?

Kerr explains that different stakeholders are looking for different things from the audit report. While some investors will just check the audit opinion is not qualified, an increasing number review the key audit matters, materiality and scoping disclosures to get a feel for the risks the auditor is focusing on. 

“Many value the insights they get from the key audit matters, but some stakeholders are looking carefully at the approach that we take to the audit, as an indicator of how we view the company overall,” says Kerr. 

The next generation of stakeholders will want things to be more digitally accessible and real time, says Kerr, but this depends first on company reporting itself evolving. “It’s going to take much more change in company reporting and accessibility, before audit reports can really follow. But I do think that progression is and will continue to happen.” The government’s Modernisation of Corporate Reporting consultation is expected in 2026.

The next phase of the audit report

Kerr believes that, as the audit report evolves further, we will see more audit firms embracing technology such as AI to support the audit report. This  might, for example, allow the report to be tailored to different users.  

“Some of the comments we get about our audit reports are that they are too technical or too jargony. But could AI take a really technical report for, say, a multinational company, and pull out and present the information in a more appropriate way for different users with different knowledge levels? I think there’s a lot of potential for the use of AI in the future of auditor reporting.”

ICAEW’s Auditor Reporting Lab is rethinking auditor reporting by exploring how auditors’ reports can be clearer, more informative and more useful to those who rely on them. Its work to date includes explainer content to help users understand the audit report, examples of emerging good practice from audit firms, and research into how language and presentation can improve clarity and usability. 

Looking ahead, the Lab will continue to explore how auditor reporting can evolve, including developing a practical writing guide for auditors, undertaking outreach with other professions, and identifying further opportunities to enhance how auditors communicate. You can explore the Lab’s work and latest insights on the Auditor Reporting Lab hub page.