From the 15th December 2016, the format and content of the auditor’s report as we knew it changed for all audits of financial statements. Every auditor’s report on the the audit of financial statements of any entity issued in South Africa, whether it is a mandatory audit or a voluntary audit, shall copy with the new and revised auditor reporting standards.
Early adoption of the new and revised auditor reporting standards was permitted and in this SAICA Report we provide an overview and analysis of the auditor reports of the early adopters for listed entity audit clients in South Africa. The focus is only on entities listed on the Johannesburg Stock Exchange (JSE).
The auditor’s report is the key deliverable that addresses the output of the audit process; it is what the users of nancial statements see and read and what enhances the credibility of the nancial statements for the users. In response to research and outreach, and various calls that the auditor’s report should be more informative about the audit that has been performed, including providing more entity-speci c and audit-speci c information, the International Auditing and Assurance Standards Board (IAASB) issued its new and revised auditor reporting standards in January 2015, with an effective date for audits of financial statements for periods ending on or after 15 December 2016. At the time this was referred to as the most signi cant development in auditing in recent history.
It is expected that when investors and analysts (and other users of nancial statements) are provided with more entity-speci c and audit- speci c information, it would provide a better context for understanding the overall message of the audited nancial statements and the auditor’s report thereon, an increase in users’ perception of audit quality and enhancing the con dence in the audit and the audited nancial statements. This is also important for the continued relevance and value of the external audit.
The new and revised auditor reporting standards, inclusive of ISA 700 (Revised), ISA 701, ISA 705 (Revised), ISA 706 (Revised), ISA 260 (Revised) and ISA 570 (Revised)1, as well as ISA 720 (Revised)2, were adopted by the Independent Regulatory Board for Auditors (IRBA) for use by registered auditors in South Africa in June 2015 and September 2015, respectively (with the same effective date as indicated by the IAASB). The IRBA issued a revised version of SAAPS 33 in March 2016, aimed at providing practical guidance to registered auditors who report on nancial statements, both for compliance with the ISAs and the legal and regulatory requirements applicable to auditors and auditor reporting in South Africa, as related to the content and format of the auditor’s report. Registered auditors who decided to early adopt the new and revised auditor reporting and related auditing standards, were also required to early adopt SAAPS 3.