This update was first published in the April 2011 UK edition of Accounting and Business magazine.
The Auditing Practices Board (APB) has issued revised versions of both ISA (UK and Ireland) 700, The Auditor’s Report on Financial Statements; and Bulletin 2010/2, Compendium of Illustrative Auditor’s Reports on UK Private Sector Financial Statements, for periods ended on or after 15 December 2010.
These revisions do not change the auditor’s responsibilities, but do amend how the scope of an audit is described in the audit report. Specifically, the auditor’s responsibility to read other financial and narrative information that is published alongside the financial statements, with a view to ensuring that there are no material misstatements or inconsistencies between it and the financial statements, will now be clearly laid out in the description of the scope of an audit.
Therefore, where the auditors of UK entities include a description of the scope an audit in their audit reports, as opposed to cross-referring to the description on the APB’s website, the wording of audit reports will need to be updated to comply with the revised bulletin. The new wording should be used for periods ending on or after 23 March 2011.
Yvonne Lang, director, and Kern Roberts, associate director, Smith & Williamson