IAASB finalises amendments to auditing standards to promote greater focus on financial statement dis

The International Auditing and Assurance Standards Board (IAASB) last week released its revised International Standards on Auditing (ISAs), Addressing Disclosures in the Audit of Financial Statements. The revisions to the standards aim to focus auditors more explicitly on disclosures throughout the audit process and drive consistency in auditor behavior in applying the requirements of the ISAs.

As a complement to these revisions, IAASB staff has also developed a publication, Addressing Disclosures in the Audit of Financial Statements, for auditors that describes financial reporting disclosure trends and their possible implications from an audit perspective and highlights how the ISAs as revised guide the auditor in addressing disclosures. 

This publication is intended to help the consistent, effective, and proper application of the ISAs when addressing disclosures as part of an audit of financial statements, and may be particularly relevant to small and medium practices implementing the changes to the ISAs.

“Understandable and relevant disclosures are essential to users of financial statements, and the focus has shifted to providing more qualitative information in the disclosures,” noted Prof. Arnold Schilder, IAASB Chairman. “Increased auditor attention to disclosures is therefore in the public interest. We will continue to collaborate and coordinate with the accounting standards setters as they consider how to best improve financial statement disclosures and make them more effective.”

“Addressing the information included in disclosures is an integral part of the audit, regardless of the financial reporting framework under which the financial statements have been prepared,” explained Kathleen Healy, IAASB Technical Director. “The IAASB firmly believes these changes to the ISAs will enhance audit quality and are capable of being applied proportionately in audits of entities of all sizes, and in all jurisdictions and sectors.”

A staff-prepared Basis for Conclusions, which explains the IAASB’s rationale for its decisions, and an At a Glance document, which explains the main changes to the ISAs, are also now available.

The revisions to the standards encompass changes to 10 ISAs and conforming amendments to five other ISAs. They will be effective for audits of financial statements for periods ending on or after December 15, 2016, in line with the effective date for the new and revised Auditor Reporting standards and ISA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information.

The IAASB develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC).

IFAC is the global organisation for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of over 175 members and associates in 130 countries and jurisdictions, representing approximately 2.8 million accountants in public practice, education, government service, industry, and commerce.