By: George M. Wilson & Carol A. Stacey<\/p>\n
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Would you expect to find this language in an auditor\u2019s report?<\/strong><\/p>\n \u201cWe performed a full scope audit on seven components representing 99% of the Group\u2019s revenue, 90% of the Group\u2019s profit before tax and 90% of the Group\u2019s net assets.<\/p>\n <\/p>\n During our first year as auditor of the Group, we visited all significant locations. For our second year, we have implemented a rotational approach to these visits.\u201d<\/p>\n Or how about a discussion of materiality<\/strong> such as this?<\/p>\n \u201cWe determined materiality for the Group to be \u00a330 million.<\/p>\n We reported all audit differences in excess of \u00a31 million.<\/p>\n <\/p>\n We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced.\u201d<\/p>\n This language may sound like it is from the auditor\u2019s internal conclusion memoranda, but in fact it is from the Deloitte report on the 2016 financial statements of an English company, Marks and Spencer<\/u><\/a>.<\/p>\n Their annual report<\/u><\/a> contains the expanded auditor\u2019s report now required by UK Auditing Standards. The report is on pages 78 to 85 (Yes, it is that long!). It also enumerates several \u201cKey Audit Matters\u201d, describing how each such issue was dealt with in the audit.<\/p>\n While this might seem like an extreme example, there has been movement in international audit standard setting towards more tailored, descriptive audit reports. Here in the US the PCAOB began consideration of changes to the auditor\u2019s report over 7 years ago.<\/p>\n In a May 24, 2017 news release<\/u><\/a> the PCAOB announced that on June 1, 2017 they will consider adopting a new Standard on the auditor\u2019s report<\/strong>. The proposal would eliminate the existing standardized form auditor\u2019s report and replace it with a more tailored report which would include discussion of audit specific issues such as \u201cCritical Audit Matters\u201d. Also to be considered at the meeting are new standards about auditing estimates and using the work of specialists.<\/p>\n You can read about the auditor\u2019s report project and review the most recent proposed version of the standard here<\/u><\/a>.<\/p>\n <\/p>\n As always, your thoughts and comments are welcome!<\/p>\n","protected":false},"excerpt":{"rendered":" By: George M. Wilson & Carol A. Stacey Would you expect to find this language in an auditor\u2019s report? \u201cWe performed a full scope audit on seven components representing 99% of the Group\u2019s revenue, 90% of the Group\u2019s profit before tax and 90% of the Group\u2019s net assets. During our first year as … Continue reading Whither the Auditor\u2019s Report?<\/span>