Financial Auditing Tips for 2017

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ISA 720 has been revised to include greater focus by auditors on consideration of ‘other information’, which includes supplementary information presented with the financial statements. As a result, you may be engaging with auditors to discuss:

  • What compromises the other information section
  • Arrangements and timing for review of other information
  • Material inconsistencies including the results of any additional audit testing

Given the changes to ISA 720 on other information and the potential impact of the ISA 701 regarding the communication of key audit matters, there is likely to be an increase in the number and nature of discussions that occur between management and auditors, auditors and those charged with governance, and management and those charged with governance.

When relevant, auditors will be required to follow a professional judgement framework when determining key audit matters to include in the auditor’s report. This framework operates like a filter to ensure that only those matters which are of most significance to the audit are brought to the attention with governance and other users of the financial statements.

Overall, here’s what you can expect to see:

  • Opinion
  • Basis for opinion
  • Emphasis of matter (if applicable)
  • Material uncertainty related to going concern (if applicable)
  • Key audit matters (if applicable)
  • Other Information
  • Responsibilities of management and those charged with governance for the financial statements
  • Auditor’s responsibilities for the audit of the financial statements

The changes noted above have the potential to cause some heartburn for some clients, especially those listed companies or public interest entities where key audit matters are required to be discussed in the body of the report. With that in mind, it is best to start opening a dialogue with your auditors now so that you can begin to get a handle on what your audit report will look like under these new standards.

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