EY welcomes greater transparency in auditor’s reports

4 June 2013

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EY welcomes today’s launch of the revised standard on auditor reporting, announced by the Financial Reporting Council (FRC). The issues of materiality, audit scope and audit risks are critical inputs to the audit planning process. Including this information in the auditor’s report will help to make it more informative to shareholders, especially when this is combined with other disclosure requirements introduced by the FRC in October 2012. These include the requirement for the auditor to report by exception, if the auditor’s views on the annual report and accounts differ from the directors’, and/or the audit committee does not appropriately address matters communicated to it by the auditor.  The revised standard will help shareholders to get a better idea of what an audit is focused on and why.

Hywel Ball, head of assurance, UK & Ireland, at EY, comments:

 “We do not believe that adopting these proposals will create excessive difficulties or risks for auditors. On balance, any risk lies more with the failure to identify the risk in the first place, rather than a failure of the auditor to report it. This added disclosure should also help to foster a better understanding, among all company stakeholders, of what an auditor actually does. 
“However, this increased level of disclosure will obviously require additional preparation and review time on the part of the auditor, and it may require more discussions between the audit team and those charged with governance.”