The Auditing Practices Board (APB) has this week published ISA (UK and Ireland) 700 (Revised) "The Auditor's Report on Financial Statements" in order to facilitate a more concise auditor's report.
Background
In 2007 the APB issued a Discussion Paper entitled "The Auditor's Report: A time for change?" which sought views on what changes needed to be made to UK auditor's reports to reflect the changes introduced by the Companies Act 2006, and whether more wide ranging changes should be made to the form and content of the auditor's report.
Institutional investors, preparer organisations, public-sector bodies and some auditing firms and individuals observed that there were opportunities for streamlining the current report especially in relation to the current descriptions of the auditor's and directors' responsibilities and with the summarised description of the scope of an audit.
Many of the institutional investors also called for the auditor's report to be made more informative. Some called for the auditor's report to provide more of an insight into the quality of the work which the auditor has carried out whilst others suggested much greater use of emphasis of matter paragraphs.
More concise auditor's reports
Improving the conciseness of the auditor's report is the first phase of APB's work to respond to the views of commentators. The new ISA (UK and Ireland) 700 (Revised) facilitates shorter auditor's reports in a number of ways including allowing cross reference to a "Statement of the Scope of an Audit" maintained on APB's web-site.
More informative auditor's reports
The second phase of APB's work to respond to commentators' views will be to undertake research to better understand what can realistically be done to make auditor's reports more informative.