Differences between the PCAOB and the International Auditing and Assur

Question: Discuss about the Auditing Assurance and Key Changes. Answer: Key Changes The key changes that have been adopted by PCAOB in order to enhance the usefulness as well as the relevance of the report of auditor through providing important and additional information to the investors. According to the new standard, critical audit matters (CAMs) need to be discussed in the auditor's report and these matters are required to communicate to audit committee(Weingarten, 2017). These are related to the disclosure or the accounts that are important for the financial statement. In the new standard, the report of auditor will disclose, among the other things and an auditor's tenure. The investors will be allowed to have to view the audit and also provided with the useful information for the purpose to make the important decisions(PCAOB, 2017). Differences between the PCAOB and the International Auditing and Assurance Standards Board (IAASB) Audit Reporting Requirements The approaches that are taken by IAASB and PCAOB for the purpose of enhancing the report of auditor are similar. The approach is used in order to provide transparency in a higher proportion, to the investors and others as well, that is related to the matters of audit and establishing the two-way communication during the process of audit with TCWG. Differences In case of IAASB standard, description of KAM for the related disclosure should address: why matter is significant in audit? and how matter was addressed in audit? However, in case of PCAOB reproposal, for every CAM that is communicated, the auditor need to: identify CAM, describe the main considerations for determination of CAM, how it is addressed, and finally refer to financial statement accounts and the disclosure related to CAM. IAASB standard requires that the identification of ethical requirements that are related as well as independent of the auditor should be stated in a statement in Basis for Opinion section, along with that, it should be also stated that the auditor has fulfilled all the ethical responsibilities. While PCAOB reproposal requires a statement in Basis for Opinion section as evidence that auditor is independent and is a registered public accounting firm with PCAOB included. IAASB standards requires disclosure of engagement partners name. On other hand in PCAOB , engagement partners as well as other accounting firms should be disclosed along with the audited entities. In both IAASB and PCAOB, the opinion section should be presented and after that Basis for Opinion selection. However, in case of IAASB, a different order may be followed if prescribed by law or regulation. In case of IAASB, the modification of the opinion by the auditor should be included in Basis for Opinion section while in PCAOB, opinion modification should be included in Opinion section. As per IAASB standards, all the responsibilities related to the management, auditor's responsibility, features of audit should be described separately in auditor's report. Also, the paragraphs related to emphasis of matter as well as the other matter are also needed in certain circumstances. However, in case of PCAOB emphasis paragraph should be included. Also, standardized language enhancements should be described in PCAOB standards for acquiring the reasonable assurance. Similarities There are many similarities between PCAOB and the International Auditing and Assurance Standards Board (IAASB). Both PCAOB and IAASB used the similar approach for the enhancement by providing the high level of transparency to the investors and other as well as established the two-way communication which will take place between the investors and the audit committee during the process of auditing and making auditing report by the auditor. Both requires to identify the communication matters to be CAM or KAM and only for the current period. Both requires providing with the description of the matter for the purpose to prevent standardized language and reveal the particular circumstances of matter. d) Introductory language is included in both PCAOB and IAASB(IAASB, 2016). Reasons/Motivation for the Changes and Critique The change has been introduced in the auditor's report. The motivation or the reasons behind the change in the auditor's report is that, by the involvement of the transparency and establishment of the two-way communication in the process of audit with the investors, will be able to help in managing a sound relationship during the audit reporting process, through the disclosure of the requirements for the auditing report between the audit committee and the investors and the others. The two-way communication enhances the relationship between the investors, others who make use of the auditor's report and the audit committee (Clearygottlieb, 2017). Likely Impact of the New Audit Reporting Requirements On Audit Practice The impact of the audit reporting on audit practice is that the disclosure of the major statements and the related facts in the new reporting system has enabled a transparency in the process of auditing among the invertors and the audit committee. The information about the auditor, the description of the CAM and KAM along with the basis of these matters, description of the specific responsibilities, and disclosure of the engagement partners as well as the modification in the option helped in providing the high level of transparency, which will help in carrying out the audit in a sound manner. The practices have become more extended as the disclosure of the different essential facts takes time, but it will allow carrying the process of audit reporting in a smoother manner. The risk of misstatement will not occur. The financial statement will be able to disclose in a transparent manner and will also benefit the public interest(Iodsa, 2015). References Clearygottlieb. (2017). New PCAOB Standard Will Mean Big Changes in Audit Reports . Clearygottlieb.com. IAASB. (2016). The New Auditors Report:A Comparison between the ISAs and the US PCAOB Reproposal. New York: IAASB. Iodsa. (2015). The impact of the new auditors report. Retrieved from www.iodsa.co.za: https://www.iodsa.co.za/news/241065/The-impact-of-the-new-auditors-report.htm PCAOB. (2017). PCAOB Adopts New Standard to Enhance the Relevance and Usefulness of the Auditor's Report with Additional Information for Investors. Pcaobus.org. Weingarten, N. (2017). PCAOB requests comment on reproposal to significantly change the auditors report. Pwc.com.