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Standard issue

All auditors and audit reports will be affected by recent revisions to the International Standards on Auditing. Geoff Swales explains how.

Audit reports will change as a result of the implementation of the Financial Reporting Council’s (FRC’s) revised International Standards on Auditing (UK) (ISAs (UK)), effective for periods commencing on or after 17 June 2016. Some auditors may think that these changes are driven solely by the UK implementation of the EU Audit Regulation and Directive (ARD), and therefore only affect auditors of public interest entities. That would be a mistake.

There are also changes driven by the adoption of the International Auditing and Assurance Standards Board’s revisions to international standards, with ISA 700 (Revised) Forming an Opinion and Reporting on Financial Statements now incorporated into ISAs (UK), which will affect all audit reports. This article explains the changes that affect all audit reports, together with additional requirements that impact audit reports of listed entities and public interest entities.

Structure and content of Audit Reports

On adoption of ISAs (UK), all audit reports will need to comply with revised requirements in ISA (UK) 700 (Revised June 2016), which affect the structure of the audit report and some of the detailed content. For example, the content of the report needs to be re-ordered. The first section will be the Opinion section, which includes the auditor’s opinion. This will be followed by the Basis for Opinion section, which describes that the audit was conducted in accordance with ISAs (UK) and includes statements that the auditor is independent and believes that the audit evidence they have obtained is sufficient and appropriate to provide a basis for their opinion.

This is an extract from an article in the October 2016 edition of Audit & Beyond, the magazine of the Audit and Assurance Faculty.

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