Question

The auditing profession in a bid to close up the expectation gap has issued new standards or revised old standards.

Required:

Write an essay , identifying the new changes that are happening and explaining the reason why the changes.

Key Issues

- Detailed analysis of the standards reviewed

- Detailed analysis of the report structure.

Conclusion

Did the changes enhanced the use of audit reports?

Answer 1

An audit is a systematic and independent examination of books,accounts,statuator records documents and vochures of an organisation to ascertain how far the financial statements as well as non financial disclosures present a true and fair view of concern.

New and revised auditor reporting standards:

ISA700 forming an opinion and reporting on financial statements.

The auditors report shall be in writing hard copy or by using electronic format.

It shall have a title that clearly indicates that is report of an independent auditor.

New ISA701,communicating key audit matters in the independent auditors report.

ISA705, Modification to the opinion in independent auditors report.

The auditor concludes that based on audit evidence obtained the financial statements as a whole are not free from material misstatement.

The auditor is unable to obtain sufficient appropriate audit evidence to conclude that financial statements as a whole are free from material misstatement

ISA706,Emphasis of matter paragraphs and other matter paragraphs in the independent auditors report.

Emphasis of matter paragraph shall be included in the auditors report immediately after opinion paragraph under under heading emphasis of matter.

A clear reference to the matter being emphasised and where same can be found in financial statements can be given report.

ISA570, Going concern.

ISA 260, Communication those charged with governance.