In a burst of activity from the Financial Reporting Council (FRC), the audit regulator has issued an updated auditors’ bulletin, which sets out example new-style audit reports although there are provisos that these cannot be used before the new ISA 700 (Revised) is implemented
The latest publication, colourfully termed the Compendium of illustrative auditor's reports, contains examples of auditor’s reports illustrating the reporting requirements of the revised International Standards on Auditing (ISAs (UK). It provides a useful reference source for practitioners and is designed to be persuasive and guidance-based, rather than prescriptive.
Bear in mind that the examples demonstrate the requirements of the revised ISA (UK) 700 (Revised) Independent Auditor's Report on Financial Statements.
As a result, the illustrated new style audit report cannot be adopted early unless the revised ISAs are also adopted early.
On the assumption that audit firms will not be in a rush to do this, the new style report will therefore first apply to 30 June 2017 year ends unless there is a short accounting period.
The auditor’s report is the key deliverable addressing the output of the audit process for users of the audited financial statements. It is therefore important that the auditor’s report is written in clear and unambiguous language.
Click here for a copy of the October 2016 FRC Bulletin: Compendium of illustrative auditor’s reports on UK private sector financial statements for periods commencing on or after 17 June 2016
The FRC has also published the Description of the auditor’s responsibilities for the audit of the financial statements which auditors are permitted to cross-refer to in their auditor’s report.