Changes to Audit Standards, improving shareholders confidence

The International Auditing and Assurance Standards Board (IAASB) has released its new and revised Auditor Reporting Standards. The new standards are the most significant changes the profession had seen in 20 years. These changes are aimed at boosting the investor and shareholders' confidence in the financial statements of a company. It took more than three years of development to put together the new requirements that are aimed at improving transparency and clarity regarding the processes and thinking involved in the audit.

Some of the new requirements include:

• Auditors need to communicate in their report what they consider the key audit matters to be and what they did to address them in the audit.
• Auditors need to focus more on issues of concern, including disclosure in the financial statements.
• Audit opinion would be at the top of the report and no longer at the end. The name of the audit partner must be noted in the report and an expanded list of the auditor's responsibilities.

The new standards are effective for audits of the financial statements of listed entities for periods ending on or after December 15, 2016.

Auditors and companies will need to prepare ahead of implementation, as some changes will require careful navigation. The new standards will be as new to management, audit committees, and users as they are to auditors.

Whether the Auditor-General of South Africa (AGSA) or any other auditing firm performs an audit, audit readiness has its benefits. With improvements in planning, communications, and data quality, a company can reduce the headaches and often lower the costs associated with a yearly audit.

Here are some tips on making this process as smooth as possible:

Experience:
It's always a good idea to get team members with prior audit experience to help facilitate the process. Their past experience and insight into what information auditors normally request and spotting potential problems beforehand can really assist in the process.

Access to Information:
Some of the biggest challenges during an audit are data records that are inaccurate or incomplete or difficult to access. It's important for finance departments to prepare all data before the audit process to save time and prevents unnecessary time wasted.

Reviewing prior year audit reports
The starting point for any audit will be reviewing the audit report from the previous year. If the client has not addressed recommendations from the past year, the auditor will once again focus back on those issues.

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