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Enhancing Audit Report Quality: Responses and Recommendations from the APB

The APB's research initiative aimed at improving audit report responses to promote quality highlights user group concerns about overly legalistic language, the timely presentation of opinions, and the need for informative content regarding estimates, judgments, evidence sufficiency, and uncertainties. The report, "The Auditor's Report: A Time for Change?" discusses the evolution of the current audit report format and presents alternative models. Stakeholder feedback indicates a desire for less boilerplate language and more informative narratives while balancing compliance with auditing standards.

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Enhancing Audit Report Quality: Responses and Recommendations from the APB

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  1. APB research into Improving the Audit Report

  2. Responses to “Promoting Audit Quality” • Auditing profession appeared comfortable with current approach • User groups expressed concerns: • Overly legalistic – too many caveats • Opinion should appear earlier • Should be more informative regarding • Estimates • Judgments • Sufficiency of evidence • Uncertainties

  3. APB’s response (1) THE AUDITORS REPORT: A TIME FOR CHANGE? DECEMBER 2007

  4. The Auditor’s Report: A Time for Change? • Explained the evolution of the current report • Described ‘the changing scene’ • Offered a number of alternative reports to help stimulate debate

  5. Alternative Reports • Example 1: Fully compliant with ISA 700 (Revised) • Example 2: ISA 700 (Revised) “Lite” • Example 3: Minimum report that complies with CA 2006

  6. Feedback on The Auditors Report : A Time for Change • Views varied by Stakeholder Group • Institutional Investors • audit reports should be more informative • favoured reduction in current ‘boiler plate’ • Companies • favoured reduction in the ‘boiler plate’ • did not support added ‘narrative’ • Auditors • wanted to achieve compliance with ISAs • wanted to retain ‘Bannerman’ • many, but not all, wanted to maintain the status quo

  7. APB’s response (2) THE AUDITORS REPORT: A TIME FOR CHANGE? ISA (UK & IRELAND) 700 REVISED DECEMBER 2007 SEPTEMBER 2008

  8. APB’s Response (2) • Facilitate shortened versions of auditor’s report (Example 2) by including ‘boilerplate’ wording on auditor responsibilities and scope of audit on APB website. • Prepare changes to ISA (UK & Ireland) 700 to allow cross reference to APB website and still be compliant with ISA 700 • Prepare other changes to auditor’s report to • Reflect CA 2006 • State compliance with APB Ethical Standards • Separate the true and fair view opinion from other legal responsibilities (the 2 part report) • Initiate research into what additional ‘narrative’ information should be included

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