With the growing complexity in financial reporting, the new and revised auditor’s report has provided more transparency, insight and relevance to users. In particular, the key change in the enhanced auditor’s report is introduction of key audit matters (“KAMs”) which, in the auditor’s judgement, discloses those matters of most significance in the audit of the financial statements.
In this survey, we present the observations from our review of the first year experience of implementing the enhanced auditor reporting standards in Singapore.
“The enhancement in the auditor’s report marks a notable milestone in the history of audit in Singapore. Auditors can now communicate the most significant matters in their audits of financial statements, demonstrating more visibly the value and relevance of audit. Our observations of first year experience of implementing the enhanced auditor’s report echo the call for greater clarity in financial reporting and corporate governance in Singapore.”
42% of the KAMs reported in Singapore included outcomes or results of the procedures performed, providing some insight on the auditor’s resolution of the KAMs, compared to 27% in Hong Kong and 20% in the UK.
The most commonly reported topics have been around valuation and impairment assessments, which typically involve significant management judgement, as well as revenue recognition.