2013-08-27 Two significant proposals on auditor's report changes

The IAASB (International Auditing and Assurance Standards Board) and PCAOB (the Public Company Accounting Oversight Board in the US) have recently issued significant proposals regarding changes to the auditor's report.

While the proposals issued by the two bodies differ, one notable similarity is that both proposals include the requirement for a discussion of key (IAASB) or critical (PCAOB) audit matters by the auditor in the auditor's report. Key audit matters ("KAM") or critical audit matters ("CAM") would encompass matters such as: significant audit risks and auditor judgments, areas of difficulty in obtaining sufficient audit evidence, circumstances requiring a significant modification of the planned audit approach or matters that posed the most difficulty to the auditor in forming an opinion on the financial statements.

Comments on the IAASB proposal are due by November 22, 2013. Comments on the PCAOB proposal are due by December 11, 2013.

Furthermore, the Canadian Auditing and Assurance Standards Board (AASB) will issue an exposure draft shortly that is expected to mirror the IAASB exposure draft, with additional questions and/or commentary for Canadian participants posed by the AASB.

Any final standard is likely to be issued in late 2014, with the effective date being 2015 at the earliest, although more likely effective date is in 2016. At this time, it is expected that the IAASB proposals would apply to all Canadian listed companies and the the PCAOB proposals would apply to all SEC registrants.

Refer to these attachments for summaries of the IAASB exposure draft and the PCAOB proposals.

Proposed new and revised International Standards on Auditing (495 KB)
Download the full PDF.
 
PCAOB proposes significant changes to the auditor's report (492 KB)
Download the full PDF.