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Auditing and Assurance Services –Emerging Trends Globally
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Prof. Arnold Schilder, IAASB Chairman
Institute of Chartered Accountants of India International Conference
Indore, India
August 8, 2015
“The Future of the Accounting Profession”
“No one can predict how the economy will change or how business practices will evolve in the future, but accountants must have intellectual curiosity and a willingness to learn
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intellectual curiosity and a willingness to learn and embrace change.”
(Leslie Seidman, former Chairman of the US Financial Accounting Standards Board, in the CPA Journal, August 2014)
• Key Projects Finalized: Clarified ISAs, Auditor Reporting, Revisions of Other Assurance and Related Services standards
• Special Support Efforts for Implementation of new and revised Auditor Reporting standards
• New Strategy and Work Plan with a number of new and
Times Are Changing for the IAASB
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• New Strategy and Work Plan with a number of new and challenging projects
• Looking for feedback on key questions – What is it that we have to address?
– What kind of development process?
– What forms of interactions with stakeholder groups?
– What kind of outputs?
New and Revised Auditor Reporting StandardsKey Features
Au
dito
r R
ep
ort Audit Opinion – Required to be presented first
Key Audit Matters – Required for listed entities
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Au
dito
r R
ep
ort
Going Concern – Additional focus
Other Information – New section
Responsibilities – In the audit; Independence and ethical obligations; Engagement partner (listed entities)
IAASB’s Auditor Reporting Project: Why?
• Audit opinion is valued – but expanded auditor’s report expected to be more relevant and informative
• Improved communication of Key Audit Matters (KAM) to investors and other stakeholders– Highlights areas of judgment and critical estimates
• Improved dialogue between auditors and audit
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• Improved dialogue between auditors and audit committees/TCwG
• Continued flexibility to allow for national requirements in relation to auditor reporting
• Feedback from the UK where similar requirements are in place indicates auditors welcome the opportunity to communicate about their work through KAM
The Decision-Making Framework for KAM
Matters that were communicated with those charged with governance
Matters that
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Matters that required significant auditor attention
Matters of most significance
in the audit
Key Audit Matters
Framework for Audit Quality
Key Elements
• Inputs
• Process
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• Outputs
• Interactions
• Contextual Factors
Audit Quality Interactions
• Primary responsibility for performing quality audits rests with auditors, but …
• Each stakeholder plays an important role supporting high-quality financial reporting
• Audit quality is best achieved in an environment where there is
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an environment where there is support from other participants in the financial reporting supply chain
• Increased interaction is promoted in the Framework for Audit Quality
• Initiatives of others addressing the role of TCwG / Audit Committee particularly important
1) Ensure that ISAs continue to form the basis for high-quality, valuable and relevant audits conducted worldwide by responding on a timely basis to issues noted in practice and emerging developments
2) Ensure the IAASB’s standards evolve as necessary to adequately address the emerging needs of
IAASB’s Strategic Objectives for 2015–2019
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adequately address the emerging needs of stakeholders for services other than audits of financial statements
3) Strengthen outreach and collaboration with key stakeholders in the reporting supply chain on public interest issues relevant to audit, assurance and related services
Work Plan for 2015–2016 – Priority Projects
Quality Control
Group Audits
Professional Skepticism
Financial Institutions
Work Plan for 2015–2016 – Priority Projects
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2015: Intense exploration, research and outreach One
discussion paper
2016: Analysis of comments and dialogue Proposals for standard
setting and other guidance
Enhancing Audit Quality with a Clear Public Interest Perspective
• Monitoring of identified and emerging developments in audit, assurance and related services and provide recommendations to the IAASB on topics to be pursued
– Data analytics and the effect on the audit, including whether ISAs could be viewed as restricting innovation
– Integrated reporting, including the demand for assurance
Preparing for the Future
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– Integrated reporting, including the demand for assurance on integrated reports
• Services other than audits, in particular for SMEs
– “Hybrid engagements” and how agreed-upon procedures may be used in connection with other services, including the IAASB’s recently revised review and compilation standards
• Notably India is already participating in a number of important fora
– IAASB National Standard Setters Liaison
– IAASB Financial Institutions Working Group
– IFAC Small and Medium Practices Committee
How can India contribute and promote change in auditing and assurance?
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– Forum of Firms in India
• But ICAI is encouraged to continue to engage in dialogue with IAASB and others based on what’s happening nationally and developing globally with respect to audit and assurance, as well as corporate reporting more broadly