Game changing auditor's reports: More insight and information than ever beforeFollow @PwC
Author: Bob Moritz , Chairman, PwC International Ltd.
As auditors, we’re proud of the contribution we’re making to build trust in companies’ financial reports and, by extension, the capital markets. But much of what we do in our audits, including the types of issues we’ve addressed and the judgments we make, has not been transparent to shareholders and other users.
This is starting to change.
At the end of 2016, the International Auditing and Assurance Standards Board’s (IAASB) revised auditor reporting standards come into effect. And over the next couple of years, auditors around the world will begin issuing new style reports as they are implemented by national standard setters and regulators. The new audit reports will be more informative, discursive and insightful— shedding light on the areas that were of most significance in the audit of the financial statements, why they were significant and how the audit addressed them.
We believe these new enhanced auditor’s reports are truly game-changing for both shareholders and the auditing profession. They will undoubtedly stimulate enhanced conversations among auditors, companies, audit committees, shareholders and regulators.
Auditors in the UK and Netherlands have been issuing enhanced audit reports that go beyond the traditional auditor’s report for a couple of years already. It’s a move that’s been greeted with enthusiasm by the shareholder community in those countries. They say that they have found the insights into key matters addressed in the audit both interesting and informative. Some have even referred to it as a “sea change”.
As auditors, we will need to hit the ground running. We’ve invested a great deal of time and effort to make sure we’re ready to pick up the challenge – from early experimentation with the “art of the possible”, to leveraging what we’ve learned in the UK and Netherlands with others across our network, to training and inspiring our teams and putting appropriate quality controls in place. And, all along that journey, we’ve been bringing audit committees and management in our clients along and preparing them for the change.
This will, however, be as new to management, audit committees and users as it is to auditors. We will all be on a learning curve. I ask that stakeholders in the audit give us feedback, good or bad, so that we can continue to improve the quality of our reports. It is really important that we get this right
We are excited that the type of insights that, in the past, may have been shared with the audit committee and management are now being shared more and more with the broader group of users of our reports. This gives us the opportunity to demonstrate more transparently the relevance of audit, and that, in turn, can help to reinforce confidence in its value.
This is not just a change in audit standards or a compliance exercise - it’s an opportunity. It’s one we intend to embrace.
From 2009, Bob led PwC US as its chairman and senior partner. During his tenure, the US firm focused on increasing quality service and enhancing its brand and reputation by developing and retaining key talent and expanding its capabilities across all areas of the business. Bob speaks widely on, and is a champion for, diversity and inclusion in the workforce as well as being an advocate for workplace flexibility. Read more