22 May 2014
The Board looks to update standards to keep up with the changing nature of disclosures
The International Auditing and Assurance Standards Board has released an exposure draft of proposed changes to International Auditing Standards that seeks to enhance the focus of auditors on disclosures. The draft encourages paying attention to disclosures earlier during the audit process, including those derived from information outside the normal accounting system.
The draft does not propose a new ISA, instead suggesting changes to a number of ISAs. The Board’s reasoning is, in part, that an integrated view on disclosures should be taken throughout the course of the financial statement audit.
Headline proposals include:
The IAASB has been clear that it cannot solve all of the issues related to disclosures on its own. It has called for greater collaboration between standard setters, regulators, users and preparers to progress discussion on important aspects and has worked with the International Accounting Standards Board in its work on disclosure frameworks and materiality.
“The IAASB’s Exposure Draft is a useful step forward in response to the growing shift in importance of disclosures in corporate reporting,” said Diana Hillier, Assurance partner at PwC. “It puts disclosures front of mind in the audit.
“It’s not the end of the story, but we agree that issues such as the risk of excessive and immaterial disclosures obscuring understanding need to be tackled by accounting and auditing standard setters working together.”
The IAASB has invited comment by 11 September 2014.