Changes in audit reporting raised at forum

PHOTO: Changes in audit reporting raised at forum

Changes in the offing in auditors' reporting are likely to improve transparency and corporate governance at listed companies, a forum heard on Wednesday.

The improvements could kick in in early 2016, for annual reports on the 2015 financial year.

They involve more disclosure in the auditors' reports written by the external auditors - and found in annual reports.

"(The changes) will have a positive effect on enhancing corporate governance, improving audit quality and increasing market confidence, with the increase in informational value derived from the auditors' report," said Mr Yeoh Oon Jin, chairman of the auditing and assurance standards committee at the Institute of Singapore Chartered Accountants (Isca), which organised the event.

Mr Yeoh, also executive chairman of PwC Singapore, said users of audited financial statements are calling for more pertinent information for decision-making.

Currently, auditors need only declare that the reported numbers offer a true and fair view of the company and that the accounting records have been properly kept in line with the Companies Act.

But the International Auditing and Assurance Standards Board recently released a draft for changes that will apply to auditors' reports here when they kick in - probably in annual reports covering the 2015 or 2016 financial years.

Auditors will need to declare if they are independent of the company and whether there are factors affecting its ability to continue as a going concern.

The auditors will also need to highlight the "key audit matters" that were most significant during their audit, typically the more complex or technical aspects of accounting, such as revenue recognition from long-term contracts, provisions and asset impairment.

There will also be a section providing details of the audit job scope of the auditors.

The inclusion of the key audit matters will raise transparency in terms of the issues faced in the audit, said Mr Shariq Barmaky, deputy chairman of Isca's auditing and assurance standards committee, and a partner at Deloitte.

Wednesday's event was supported by the Accounting and Corporate Regulatory Authority, Singapore Accountancy Commission, Singapore CFO Institute, Singapore Institute of Directors and Securities Investors Association (Singapore).

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