The International Auditing and Assurance Standards Board (IAASB) has issued revised international auditing standards designed to sharpen auditors’ focus on disclosures and to drive consistency in the application of the standards.
The IAASB released the revisions, called the International Standards on Auditing, Addressing Disclosures in the Audit of Financial Statements, on Wednesday.
The standards have an accompanying publication that describes financial reporting disclosure trends and possible implications from an audit perspective. The publication is “intended to help the consistent, effective, and proper application of the ISAs when addressing disclosures as part of an audit of financial statements, and may be particularly relevant to small and medium practices implementing the changes to the ISAs,” according to a news release.
IAASB Technical Director Kathleen Healy said in the release that addressing the information included in disclosures is “an integral part of the audit, regardless of the financial reporting framework under which the financial statements have been prepared.”
She said the IAASB believes the changes will enhance audit quality and are “capable of being applied proportionately in audits of entities of all sizes, and in all jurisdictions and sectors.”
The revisions cover changes to ten ISAs, and conforming amendments to five other ISAs. The revisions will be effective for audits of financial statements for periods ending on or after December 15th 2016, the same effective date for new and revised standards related to ISA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information.
Increased auditor attention to disclosures is in the public interest, IAASB Chairman Arnold Schilder said in the news release. “Understandable and relevant disclosures are essential to users of financial statements, and the focus has shifted to providing more qualitative information in the disclosures,” he said.
—Neil Amato (firstname.lastname@example.org) is a CGMA Magazine senior editor.