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Improving the Auditor's Report

Posted by Chris Westworth on 28 August 2012
Westworth Kemp suggest shortening the audit report

Too much information may blunt the report as a communication tool, actually contributing to the expectation gap, and a shorter report with cross references to information on the internet may work better. Their summary letter and full submission suggest that the proposed report is too long and prone to boilerplate commentary which is counter to the current thrust of reducing the clutter.  The inclusion of commentary on areas of sensitivity contributes to the excessive length and detracts from more clearly identifying those areas where the auditor disagrees with information in the financial statements.
 

The IAASB should not address this topic alone but should work with the IASB to arrive at a practical conclusion to the presentation of clear uncluttered information in a financial reporting framework that includes the positioning and content of the auditor’s report and the determination of what information should be included in that report as opposed to the financial statements. We recommend that this joint working party should address not only format but how best to deal with the many judgments in financial statements in the financial report as a whole. These proposals are in danger of overlaying another layer of disclosure without making the financial report as a whole any more meaningful.
 

Furthermore, in our experience auditors are often ill placed to make assessments of either solvency or its related concept of “going concern”. In our view consideration of an auditor’s role in opining on solvency/going concern should be accompanied by a discussion of the communications that auditors should obtain from client’s bankers and the nature of solvency.

Author:Chris Westworth
Tags:NewsAssuranceCompanyReporting

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