Larry Bradley, Global Head of Audit for KPMG International, said: “Users of financial statements are telling us they want to derive more value from the audit and that the traditional pass/fail model of the auditors’ report is no longer giving them sufficient information .. The IAASB’s proposals are an important first step towards better meeting the needs of users who want more insight into the audit that was performed than is possible under the current reporting model.”
Larry Bradley indicated that it will be important for the IAASB to evaluate user reaction to the expanded report. He said: “A critical part of the IAASB’s post-implementation review will be to understand if the information reported as key audit matters meets the needs of users and whether further enhancements are needed. Further, we believe there is a case for providing added value by expanding auditor assurance beyond the financial statements, to include financial and non-financial information presented outside the financial statements that is used by investors, such as management discussion and analysis, earnings announcements or periodic disclosures of key performance indicators.”
KPMG supports enhanced disclosures in the financial statements and the auditor’s report relating to key judgements made about whether or not a material uncertainty relating to the going concern basis of accounting exists. However, KPMG does not support the proposal that a statement on “going concern” should be included in the auditor’s report even when there is no doubt over a company’s ability to continue as one.
“We believe that statements relating to the use of the going concern basis of accounting and material uncertainties would be more informative to users if they were only included when an issue with respect to going concern has arisen,” said Sylvia Smith, partner in KPMG’s International Standards Group based in London.
Larry Bradley concluded “The implementation of change works best when there is alignment of the goals of all stakeholders. We recognize that the IAASB does not set rules that govern reporting by management and those charged with governance. We believe however, that it is important that the IAASB encourages jurisdictions that adopt its standards to also consider implementing requirements for management and those charged with governance to report on matters that were of most significance in the discharge of their responsibilities. This will help to better align the reporting responsibilities of management and those charged with governance with those of the auditor in respect of reporting key audit matters.”
For more information, please contact:
Corporate Communications, KPMG in the UK
+44 207 694 4246
About KPMG International
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.