Revised ISA 700: 'The auditor's report on financial statements'

The Auditing Practices Board (APB) has issued a revised standard on auditor’s report that is aimed at producing more concise and more informative reports. The revised standard includes examples of reports that are applicable for UK companies, except charitable ones, in respect of accounting periods ending on or after 5 April 2009. The revised standard and new format reports will be applicable to all other UK entities for periods ending on or after 15 December 2010.

The revised ISA (UK and Ireland) 700 should enable auditors to produce shorter reports by bringing about changes to the 'basis of opinion' section and auditor’s responsibilities description of the previous report.

The main change in the report relates to the 'basis of opinion' section. The revised ISA changes the heading of this section to 'Scope of the audit' and allows three alternatives. In the case of UK companies, the report can:

  • cross refer to a 'Statement of the Scope of an Audit' that is maintained on APB’s web site; or
  • cross refer to a 'Statement of the Scope of an Audit' that is included elsewhere within the Annual Report; or
  • include a prescribed description of the scope of an audit that is shorter than the previous basis of opinion.

The statement of the scope of an audit can be accessed from the main webpage of the APB’s website.

Another relevant change relates to the description of the auditor’s responsibilities which has been both reduced in length and in part re-distributed to the second part of the auditor’s report that addresses other reporting matters.