The financial crisis served as a trigger for a fundamental review of the role of the audit. Regulators, standard setters, auditors and others are working to clarify what information the audit report should provide, the questions auditors should be asking and management's responsibilities in the information supply chain. Whatever the final outcome - and there is no doubt that auditor reporting is going to change - business should engage in the debate as it evolves.
Arnold Schilder, chairman of the International Auditing and Assurance Standards Board (IAASB), and Richard Sexton, PwC deputy global assurance leader, share their insights on developments with PwC partner Diana Hillier in three short videos. The topics discussed are:
Building consensus on the future of audit
The future of auditing will inevitably be shaped by continuing fallout from the financial crisis. Changes to standards and new rules of engagement between auditors, companies, audit committees, shareholders and regulators are on the cards. Questions remain over the precise role of audit as capital markets face new regulatory challenges.
Demonstrating enough professional scepticism?
In the wake of the financial crisis, one of the issues raised by audit oversight inspectors and other regulators was their view that auditors exhibited a worrying lack of scepticism.
Auditor reporting - more insight for stakeholders?
Perhaps the loudest demand for a change in auditing following the financial crisis has been for fundamental change in the auditor's report. The audit is a long and complex process and yet what's visible to shareholders is a one-page report that includes one opinion and a lot of standard wording. Investors say they want auditors to provide greater insights, less standardised wording, much more entity-specific information.