Question

The IAASB recently revised its standards related to audit reporting. ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, requires the auditor’s report to include the following paragraphs under the headings “Basis for Opinion” and “Auditor’s Responsibilities for the Audit of the Financial Statements”:

Basis for Opinion

We conducted our audit in accordance with ISAs. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in [the home country] and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Answer 1

The International Auditing and Assurance Standards Board (IAASB) has released its new and revised auditor reporting standards that are designed to significantly enhance auditor's reports for investors and other users of financial statements. Most notable enhancement is a new requirement for auditors of listed entities' financial statements to communicate 'Key Audit Matters' that the auditor views as most significant, with an explanation of how they were addressed in the audit.

The complete suite of new and revised standards consists of

• ISA 700 (Revised) Forming an Opinion and Reporting on Financial Statements
• ISA 701 Communicating Key Audit Matters in the Independent Auditor's Report
• ISA 570 (Revised) Going Concern
• ISA 705 (Revised) Modifications to the Opinion in the Independent Auditor's Report
• ISA 706 (Revised) Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report
• ISA 260 (Revised) Communication with Those Charged with Governance and
• Conforming Amendments to ISAs 210, 220, 230, 510, 540, 580, 600, and 710

The new and revised auditor reporting standards will be effective for audits of financial statements for periods ending on or after 15 December 2016.