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The Future of Audit


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Presentation by Warren Allen, President, International Federation of Accountants at the Institute of Certified Public Accountant of Greece, in Athens, Greece, September 19, 2014

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The Future of Audit

  1. 1. The Future of Audit Warren Allen, President International Federation of Accountants September 19, 2014 Institute of Certified Public Accountants of Greece Athens, Greece Page 1 | Confidential and Proprietary Information
  2. 2. IFAC Overview Strengthening Organizations, Advancing Economies Page 2 | Confidential and Proprietary Information
  3. 3. Page 3 | Confidential and Proprietary Information IFAC Overview • Supporting standards development • Improving quality and capacity • Supporting the profession • Global representation and advocacy
  4. 4. Page 4 | Confidential and Proprietary Information The Changing Audit Environment • Significant regulatory change has occurred over the last 20 years • The global financial crisis has triggered more questions • There is increased complexity in financial reporting and global business activity
  5. 5. Page 5 | Confidential and Proprietary Information The Changing Audit Environment • ICAEW/RSA AuditFutures report • CPA Australia’s call for “audacious goals” • FEE public consultation on the future of audit and assurance • Denmark extended review engagement
  6. 6. Page 6 | Confidential and Proprietary Information The Changing Audit Environment • In response to the FEE discussion paper, IFAC stated that: – The accountancy profession must be “forward-looking” – There must be an open discussion on alternatives to an audit – The accountancy profession must undertake critical self-examination
  7. 7. The IAASB’s Response as a Global Standard-Setter • Enhancing the value of the audit – Auditor Reporting – A Framework for Audit Quality – Audit of financial statement disclosures – Other information/ISA 720 Page 7 | Confidential and Proprietary Information
  8. 8. Page 8 | Confidential and Proprietary Information A Framework for Audit Quality • Key elements of audit quality: – Input – Process – Outputs – Interactions – Contextual factors
  9. 9. Page 9 | Confidential and Proprietary Information Beyond Audits • ISAE 3000 (Revised) • Revision of standards for Review and Compilation Engagements • Monitoring reporting trends
  10. 10. Page 10 | Confidential and Proprietary Information Why Change the Auditor’s Report Now? • Building a foundation • Remaining relevant • Enhancing public trust • Meeting user demand for information
  11. 11. Revised Requirements for Determining KAM Page 11 | Confidential and Proprietary Information • Focus on matters that required “significant auditor attention” but revised considerations in light of feedback • More closely linked to matters likely to be disclosed in the financial statement • Second “filter” to select the matters “of most significance”
  12. 12. Revised Requirements for Communicating KAM • The IAASB has agreed to retain flexibility in describing a KAM • The IAASB will provide further guidance to support providing relevant information Page 12 | Confidential and Proprietary Information
  13. 13. Page 13 | Confidential and Proprietary Information Feedback on Going Concern • Respondents continue to advocate a holistic approach • The IAASB to revert to exception-based reporting based on feedback to the Exposure Draft • The IAASB continues to work with IASB and regulators
  14. 14. Feedback on Proposed Work Program 2015-2016 Page 14 | Confidential and Proprietary Information • Focus on three priority projects – Quality Control – Special Audit Considerations Relating to Financial Institutions – Professional Skepticism
  15. 15. Page 15 | Confidential and Proprietary Information IAASB Innovation Working Group • Exploration of emerging developments • Possible actions • Areas of Priority – Integrated Reporting – Effect of evolving use of technology on audits
  16. 16. Will you join the global accountancy community in Rome in November 2014?