Auditing Reporting Standards Project. (5% of course grade) This project involves exploring in more depth the changes to the Audit Report that will come into effect in Canada. You will summarize the...

Question 1
Explain the main issues the ITC aimed to address as it relates to the changes to the standard auditor's
eport that will come into effect in Canada. (1-2 pages)
Answer 1:
IAASB in its deliberation to make changes to audit report set out its indicative direction through the
Invitation to comment i.e., ITC. This ITC reflects the changes proposed by IAASB along with the
ationale of the board to such improvements.
Accordingly, The ITC aimed to address the following issues as it relates to changes to the standard
auditor’s report:
1. The concern that the report should be of value to the users and should provide them with the
information of the entity, its financial performance and management responsibility towards
the stakeholders of the entity was one of the major issue which drove changes in the report
2. There was an increasing demand globally to make the report greater transparent in reference
to significant matters in the financial statements, along with the conduct of the individual
audit.
3. As per IASB, meaningful changes in the report now, rather than incremental change over a
span of time was seen necessary to better meet the information needs of users of audited
financial statements.
4. With increase in global business, the report should be capable of being operationalised and
understood globally. It should be capable of being implemented in diverse national
environments and should have consistency in order to be comparable.
5. To remove the issues related to disclosures, it was required that the report should have
defined set of wordings and order of the matters to be addressed in the report along with
certain amount of flexibility as per the legislative requirements of certain entities.
6. The need for ordering structure under the report was seen by the board so that a more holistic
view of the entity could be captured and available to the users.
7. In order to provide more holistic view of the audit engagement firm and audit procedures,
such changes were mandated.
8. To make the report transparent which discusses entity specific points along with certain
defined areas of disclosure, enhancement to the existing standard audit report was required.
9. The committee aimed to achieve universal reporting framework for all types of entities
through such changes
10. To help deepen the engagement between stakeholders, management and auditors, the IAASB
suggested inclusion of auditor commentary paragraph.
11. The global financial crisis enhanced the diligence of the auditor towards its reporting and
thus the disclosures/conclusion with respect to accuracy of managements’ assumption related
to going concern and “material uncertainties related to events or conditions that may cast
significant doubt on the entity” were included in the audit report.
12. To shift the attention from information which is fundamental to users to such information
which is of importance to the users, the auditor commentary para was introduced by the
IAASB
13. The board was of the view that all the entities are not similar and cannot afford to work on
such explained and enhanced version of audit report and thus provided for certain relaxations
in terms of usage of paragraphs at the discretion of the auditor.
14. Further, in order to
idge the expectations gap of the users from management report and
auditor’s report, changes were also made in the standards to auditing.
15. The disclosure of engagement partner in case group audit assignments was looked upon as
setting enhanced/additional responsibility of the person signing/ documenting its name in the
eport in respect of its disclosures and objectivity.
To conclude, it can be infe
ed from the above discussion that the most important issue which ITC
aimed in its expanded audit report was to make it consistent and comparable globally along with
depicting clear picture of the entities financial stability and transparent financial reporting.
Question 2
Summarize key data for the one response letter assigned to you - see below. Use the template table
elow to enter your summary data.
Answer 2:
Auditing Reporting Standards Project - ACC 931
Respondent information
Response letter number: 5
Name and/or affiliation of
espondent:
The Canadian Securities Administrators Chief Accountants Committee
Type of respondent:
-Individual
-Professional organization
-Auditing firm
-Corporation
-Academic
-other, description
Professional Organization
Respondent’s nationality Canadian
Response Information
Summary of ITC issues
addressed
The organization raised concerns related to proposed auditor
commentary and proposed statements related to going concern and cost
elated to such expansion of auditor’s report. In my view, the
espondent’s position is self-serving as they have addressed issues
which will impact the stakeholders but have not considered the benefit
of audit to the users.
IAASB’s ITC questions: *
I. Overall conclusions The respondent organization opposed the expansion in the auditor’s
eport stating the recent issues related to transition to ISAs by the
Canadian stakeholders.Moreover, they have raised...