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ISCA today releases the new and revised auditor reporting standards. These standards, which are based on the new and revised auditor reporting International Standards on Auditing (ISAs) issued by the International Auditing and Assurance Standards Board (IAASB), stems from the IAASB project to enhance auditor communication in response to investors’ call for the auditor's report to be more informative and relevant.
These standards are expected to reinvigorate the audit and change the manner in which auditors communicate their work in the auditor’s report. This will inevitably impact other stakeholder groups, including the preparers of the financial statements (CFOs and their finance team), the directors, the investors and the regulators.
The most significant enhancement to the auditor’s report is the new requirement for auditors of financial statements of listed entities to communicate “Key Audit Matters (KAM)” – those matters that the auditors judge to be of most significance in the current period audit, with an explanation of how they were addressed in the audit. There are also enhancements to the auditor’s attention and communication on matters related to going concern in the auditor’s report, applicable to audits of financial statements of all entities.
New and Revised Auditor Reporting Standards
- Singapore Standard on Auditing (SSA) 700 (Revised), Forming an Opinion and Reporting on Financial Statements;
- New SSA 701, Communicating Key Audit Matters in the Independent Auditor’s Report;
- SSA 705 (Revised), Modifications to the Opinion in the Independent Auditor’s Report;
- SSA 706 (Revised), Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report;
- SSA 570 (Revised), Going Concern; and
- SSA 260 (Revised), Communication with Those Charged with Governance.
Conforming Amendments
In addition, conforming amendments have been made to the following SSAs and locally developed pronouncements:
- SSA 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Singapore Standards on Auditing;
- SSA 210, Agreeing the Terms of Audit Engagements;
- SSA 220, Quality Control for an Audit of Financial Statements;
- SSA 230, Audit Documentation;
- SSA 510, Initial Audit Engagements - Opening Balances;
- SSA 540, Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures;
- SSA 580, Written Representations;
- SSA 600, Special Considerations - Audits of Group Financial Statements (Including the Work of Component Auditors);
- SSA 710, Comparative Information - Corresponding Figures and Comparative Financial Statements;
- Statement of Auditing Practice (SAP) 2 (Revised), Auditors and Public Offering Documents;
- Audit Guidance Statement (AGS) 5, Audits of Entities in Specific Industries, Professions or Vocations; and
- AGS 10, Joint Audits.
Effective Date
The new and revised auditor reporting standards and the conforming amendments are effective for audits of financial statements for periods ending on or after 15 December 2016. Early adoption is allowed.
ACRA and ISCA will be issuing a joint press release on the new and revised standards on 30 July 2015. Please refer to www.acra.gov.sg for more details.
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