The International Auditing and Assurance Standards Board issued new and revised auditor reporting standards that take effect in December 2016. The standards are intended to increase transparency in audit reporting and enhance communication between auditors and report users. Key changes include requiring auditors to communicate "key audit matters" in reports for listed entities and expanding discussions of auditor responsibilities and other information contained in audited financial statements.

1. Cairo-17/12/2016Audit | Tax | Advisory
ISA 701 (New)
Communicating Key Audit Matters in the
Independent Auditor’s Report
‫للتدقيق‬ ‫الدولي‬ ‫المعيار‬701(‫جديد‬)
‫التدقيق‬ ‫أمور‬ ‫إيصال‬‫ا‬ ‫المدقق‬ ‫تقرير‬ ‫في‬ ‫الرئيسية‬‫لمستقل‬
Dr. Daoud Y. Sobh
Consultant,
Crowe Horwath Professional Auditors
Members Crowe Horwath International
‫عمل‬ ‫ورشة‬:‫للمدقق‬ ‫الحديثة‬ ‫المهارات‬
‫العرب‬ ‫والمراجعين‬ ‫المحاسبين‬ ‫اتحاد‬
‫القاهرة‬–17/12/2016

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Overview
of the New and Revised Auditor Reporting Standards
and Related Conforming Amendments
‫عامة‬ ‫نظرة‬
‫على‬‫المدقق‬ ‫تقارير‬ ‫معايير‬‫ال‬‫و‬ ‫جديدة‬‫ة‬َ‫ل‬َّ‫د‬َ‫ع‬ُ‫م‬‫ال‬
‫و‬‫التعديالت‬‫المعايير‬ ‫على‬‫الصلة‬ ‫ذات‬

3. Cairo-17/12/2016Cairo-17/12/2016
New and Revised
Auditor Reporting Standards
Enhancing Communicative Value
‫َّله‬‫د‬َ‫ع‬ُ‫م‬‫وال‬ ‫الجديدة‬ ‫المدقق‬ ‫تقارير‬ ‫معايير‬
‫التواصل‬ ‫قيمة‬ ‫ن‬ِّ‫س‬َ‫ح‬ُ‫ت‬
ISA 701 (New) Communicating Key Audit Matters 3

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Why Change the Auditor’s Report Now?
 The Auditor’s Report is the key deliverable to communicating the
results of the audit process.
 Investors and other USERS of the financial statement have asking
for a more informative auditor’s report, in particular for auditors to
provide more relevant information to users.
ISA 701 (New) Communicating Key Audit Matters 4
 Research, public consultations, and
stakeholder outreach, including
global roundtables, indicate that
enhanced auditor’s report is critical
to influence the perceived value of
the audited financial statement.

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‫المعايير‬‫الجديدة‬‫و‬‫التي‬ ‫التغييرات‬‫على‬ ‫أدخلت‬
‫معايير‬‫التدقيق‬
ISA 701 (New) Communicating Key Audit Matters 5
‫ته‬‫ـ‬‫إل‬ ‫دف‬‫ـ‬‫ى‬:
 Significantly enhance value of
independent audit,
‫تعزيز‬‫قيمة‬‫التدقيق‬‫المستقل‬‫بشكل‬‫ملحوظ‬.
 Designed to change how auditors
communicate their work in their
reports.
‫تغيير‬‫كيفية‬‫إيصال‬‫المدققون‬‫عملهم‬‫في‬
‫تقاريره‬‫م‬.
 Increased auditors’ focus on going-
concern matters and added more
transparency in the auditor’s report to
address his work performed.
‫زيادة‬‫تركيز‬‫المدقق‬‫على‬‫أمور‬‫استمرارية‬
‫المنشأة‬‫وإضافة‬‫المزيد‬‫من‬‫الشفافية‬‫في‬‫ت‬‫قرير‬
‫المدقق‬‫لمعالجة‬‫التعبير‬‫عن‬‫عمله‬‫الذي‬‫قام‬
‫بتنفيذه‬.
 Auditors of listed entities will be
required to communicate “key audit
matters - KAM” in the auditor’s reports.
‫إيصال‬"‫أمور‬‫التدقيق‬‫الرئيسية‬-KAM"‫في‬
‫تقارير‬‫المدقق‬‫حول‬‫البيانات‬‫المالية‬‫للمنش‬‫اءات‬
‫درجة‬ُ‫م‬‫ال‬‫في‬‫قسم‬‫مستقل‬.
 The new and revised Auditor Reporting
Standards PUT the foundation for the
future of global auditor reporting and
improved auditor communications
‫ت‬‫ضع‬‫ال‬‫معايير‬‫ال‬‫جديدة‬‫و‬‫ال‬‫معدلة‬‫لتقارير‬‫ا‬‫لمدقق‬
‫األساس‬‫لمستقبل‬‫عالمية‬‫وشمولية‬‫تقارير‬
‫المدقق‬،‫وتحسين‬‫تواصالت‬‫المدقق‬
The new and changes made to the
auditing standards

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What are the Intended Benefits?
ISA 701 (New) Communicating Key Audit Matters 6
 Enhanced communication between
auditors and users, investors, as well
as Management/ TCWG.
‫تعزيز‬‫التواصل‬‫بين‬‫المدققين‬‫والمستخ‬‫دمين‬
،‫والمستثمرين‬‫وكذلك‬‫اإل‬‫دارة‬/TCWG.
 Increased user confidence in audit
reports and financial statements.
‫زيادة‬‫ثقة‬‫المستخدم‬‫في‬‫تقارير‬‫التدقي‬‫ق‬
‫والبيانات‬‫المالية‬.
 Increased transparency, audit quality,
and enhanced information value.
‫زيادة‬‫الشفافية‬‫وجودة‬،‫التدقيق‬‫وقيمة‬
‫المعلومات‬‫المحسنة‬.
 Increased attention by management
and preparers of financial statements
to disclosures that are referenced in
the auditor's report.
‫االهتمام‬‫المتزايد‬‫من‬‫قبل‬‫اإلدارة‬‫ومعدي‬
‫البيانات‬‫المالية‬‫ب‬‫اإلفصاحات‬‫التي‬‫يتم‬‫الرجوع‬
‫إليها‬‫في‬‫تقرير‬‫المدقق‬.
 To include in the Audit Report and
focus on matters that could result in
an increase in professional skepticism.
‫أن‬ُ‫ي‬‫درج‬‫في‬‫تقرير‬‫التدقيق‬‫و‬‫إن‬‫يتم‬‫ا‬‫لتركيز‬
‫على‬‫األمور‬‫التي‬‫يمكن‬‫أن‬‫تؤدي‬‫إلى‬‫زيادة‬
‫الشك‬‫المهنى‬.
 Enhanced financial reporting in the
public interest.
‫تعزيز‬‫التقارير‬‫المالية‬‫للمصلحة‬‫العامة‬.
‫المرجوة؟‬ ‫الفوائد‬ ‫هي‬ ‫ما‬

7. Cairo-17/12/2016Cairo-17/12/2016
IAASB issues final standards to improve
auditor's report
‫بالمختصر‬
‫والتأكيد‬ ‫التدقيق‬ ‫معايير‬ ‫مجلس‬
‫يصدر‬‫تقرير‬ ‫لتحسين‬ ‫النهائية‬ ‫المعايير‬‫المدقق‬
In brief:
IAASB: International Auditing and Assurance Standards Board

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The New and Revised Auditor Reporting Standards = (7)
and related conforming amendments = (8)
What's Changing? What's New?
These 7 standards and 8 related conforming amendments are:
ISA #
1 700 (Revised) Forming an Opinion and Reporting on Financial Statements
2 701 (New) Communicating Key Audit Matters in the Independent
Auditor’s Report
3 705 (Revised) Modifications to the Opinion in the Independent Auditor’s Report
4 706 (Revised) Emphasis of Matter Paragraphs and Other Matter Paragraphs in the
Independent Auditor’s Report
5 570 (Revised) Going Concern - GC
6 260 (Revised) Communication with Those Charged with Governance - TCWG
7
720 (Revised) The Auditor’s Responsibilities Relating to Other Information
in Documents Containing Audited Financial Statements
ISA 701 (New) Communicating Key Audit Matters 8

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Conforming Amendments to ISAs:
9ISA 701 (New) Communicating Key Audit Matters
ISA #
1 210 Agreeing the Terms of Audit Engagements
2 220 Quality Control for an Audit of Financial Statements
3 230 Audit Documentation
4 510 Initial Audit Engagements—Opening Balances
5 540 Auditing Accounting Estimates, Including Fair Value Accounting
Estimates, and Related Disclosures
6 580 Written Representations
7 600 Special Considerations—Audits of Group Financial Statements
(Including the Work of Component Auditors)
8 710 Comparative Information—Corresponding Figures and
Comparative Financial Statements
The New and Revised Auditor Reporting Standards
and related conforming amendments

10. Cairo-17/12/2016Cairo-17/12/2016
‫حدث؟‬ ‫ماذا‬
Issue Date: January 15, 2015
The International Auditing and Assurance Standards
Board - IAASB, issued new and revised auditor reporting
standards and related conforming amendments
intended to provide greater transparency about the audit
that was performed.
ISA 701 (New) Communicating Key Audit Matters 10
What happened?
Effective Date: December 15, 2016
The new and revised Auditor Reporting Standards
are effective for audits of financial statements
for periods ending on or after December 15, 2016.

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What has changed
11
Overarching Standard for Auditor Reporting – ISA 700 (Revised)
Conforming amendments to
ISA 210, 220, 230, 510, 540, 580, 600 and 710
ISA 701 (New) Communicating Key Audit Matters

12. Cairo-17/12/2016Cairo-17/12/2016
Key Features of the New Auditor’s Report
12
Auditor’s
Report
What is
New
- Expand Responsibilities of Management including TCWG
- Expand Responsibilities of Auditor with provision that
certain components are in Appendix or Website
Other Information – Enhanced work effort and new section
(reporting under ISA 720-revised)
Going Concern – Additional Focus Include a separate section
in the auditor’s report only when a Material Uncertainty
exists
- Key Audit Matters
- Name of Engagement Partner
Audit Opinion – Required to be presented first
Followed by Basis of Opinion (regardless of whether a modified
opinion is expressed on the financial statements).
Explicit statement In the “Basis for Opinion” section about
independence & ethical requirements, with disclosure of
the origin of those requirements.
Required for Listed
Entities
ISA 701 (New) Communicating Key Audit Matters

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New Structure
1. Opinion
2. Basis for ?? Opinion, (Independence,
Ethical Responsibilities)
3. Material Uncertainty Related to GC (If
Applicable)
4. Emphasis of Matter (If Applicable)
5. Key Audit Matters (Listed Companies)
6. Other Matters (IF Any)
7. Other Information- reporting in
accordance with ISA 720 (If Applicable)*
8. Responsibilities of Mgmnt and TCWG
9. Auditor’s Responsibilities (Detailed
within or Appendix or on Website)
10. Report on Other Legal and Regulatory
Requirements (If Applicable)
11. Eng. Partner Name (Listed Entities)
1. Introduction including Identification
of Financial Statements.
2. Management Responsibility for the FS
3. Auditor’s Responsibility
4. Basis For ?? Opinion (modified)
5. Opinion
6. Emphasis of Matter (If Applicable)
7. Other Matters (If Applicable)
8. Report on other legal and Regulatory
(If applicable)
New Report Structure Old Report Structure
Opinion

14. Cairo-17/12/2016
Thank You
Dr. Daoud Y. Sobh
Email: daoud.sobh@iktissad.com
14ISA 701 (New) Communicating Key Audit Matters

15. Cairo-17/12/2016Cairo-17/12/2016 15ISA 701 (New) Communicating Key Audit Matters
2) Our Assessment of Risks of Material Misstatement
1) Our Opinion on the Financial Statements is Unmodified
Of the 18 key risks identified, we describe below, the 8 Key Audit Risks that had the
greatest effect on our audit