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.

Posted in:NewsAssuranceCompanyReporting  

APES 215 Forensic Accounting Services - proposed revisions

Posted by Chris Westworth on 8 August 2012
Westworth Kemp have made a brief submission to the APESB.

The Accounting Professional and Ethical Standards Board (APESB) is presently seeking feedback on proposed revisions to APES 215 Forensic Accounting Services:


"Generally we support the amendments proposed in the exposure draft.  The two new Appendices are helpful in determining the nature of different forensic accounting services.  However, we make the following comments.


  1. We are concerned that the extension of the definition of Expert Witness (from “Generally all opinion evidence …” onwards) is more in the nature of commentary on the nature of the evidence that may be provided rather than part of the definition of an Expert Witness.  In our view, the definition should stop at “under an insurance policy” and the second half of the paragraph should be shown separately as explanatory commentary.
  2. Paragraph 5.9 does not connect well with the material that precedes it.  Perhaps it should be rephrased along the lines of “The work performed by the Member and the process by which the Member arrived at an opinion or other evidence … may be documented in working papers”.  The Board may also wish to consider adding that such working papers may have to be produced to the Court under a subpoena.
  3. Appendix 2 – the notes down the right hand side in our view are confusing and detract from the usefulness of the flowchart in assisting Members with the decision as to which service they are providing.
  4. Appendix 3 Item 14 is unnecessarily restrictive.  The provision of consulting expert advice, also known as a “shadow” or “dirty” expert, is not limited to Family Law and also occurs regularly in commercial matters.


Generally in the APES literature, there seems to be a lack of clarity as to whether Members (as defined) are made up entirely of Members in Practice and Members in Business, or whether there is a third category of Members who are not in business, but nor are they in practice, as defined, but are still bound by the standards."

Posted in:NewsLitigation Support  


Posted by Chris Westworth on 10 July 2012

Chris spent three days in the Federal Court in Melbourne in May.

In the recently concluded Centro matter, Chris acted as the expert audit and accounting witness for PwC. The size and complexity of this matter put the process of expert conclaves and hot tubs into an entirely new frame. Five experts, multiple pleadings, and the sometimes surprising informality of the process challenged experts and counsel alike.


And yet in Chris’ view the process seemed to work.


Once the expert conclave found its modus operandi, it succeeded in providing an effective synthesis of the views of the experts distilling their multi-faceted reports into a usable matrix that highlighted points of similarity and difference.

Whilst the “hot tub” provided counsel with complex procedural issues in handling cross examination, it enabled a concise articulation of the experts’ views on the topics the court saw as material to the case in 3 days - a much more efficient process than traditional serial cross examinations.
Posted in:NewsLitigation Support  

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Chris and Stephanie act as consultants and experts (“clean” and “dirty” experts) in the context of dispute resolution on a variety of financial reporting and audit issues.

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