In it’s report The Extended audit report: the start of the conversation, the Institute expressed continued support for the development of audit is needed in the face of events like the Tesco and Rolls Royce scandals.
“The extended audit report has come far in the UK, but the achievement is fragile and needs the continued support of everyone involved,” Henry Irving, head of audit at assurance, ICAEW said.
“Auditors should be courageous and do their audits justice, while regulators should help by sharing best practice rather than highlighting bad practice," he added.
The report includes a six-point call to action, including: for auditors to be courageous and do their audits justice; for public interest entities to invest in reporting; for inventors to use and analyse reports, and ask for the information they want; for government to permit and encourage transparency; for professional bodies to promote and train best practice and finally for academics to use data in extended audit reports to emphasise audit quality.
“Everyone should be working together to promote best practice in audit, from professional bodies helping to train practitioners and businesses, to academics who can use the rich data to shine a light on audit quality,” Irving continued.
“All this represents a significant challenge for the profession. There is a real risk of failure, but the prize is worth striving for: clear communication of the value and relevance of auditing,” he added.
Yesterday, the International Auditing and Assurance Standards Board (IAASB) welcomed the adoption of a new auditing standard by the Public Company Accounting Oversights Board (PCAOB).
The new standard, which is similar in many ways to the IAASB new and revised auditor reporting standards, is now subject to approval by the Securities and Exchange Commission (SEC).
“The PCAOB’s adoption of a standard to enhance auditor’s reports is a significant step forward in providing useful and relevant information to investors and other users,” said professor Arnold Schilder, IAASB chairman.
“We are particularly pleased that the PCAOB’s requirements are comparable to those of the IAASB.
“Coordination among standard setters is important in striving toward auditing standards that are, in principle, globally consistent,” he added.
If approved by the SEC, the new standard will be the first major changes to the content of US auditor’s reports for 70 years.