The document discusses the evolving landscape of auditing, highlighting regulatory changes, complexities in financial reporting, and the need for the accountancy profession to adopt a forward-looking approach. Key focus areas include enhancing audit quality, revising auditor reporting standards, and addressing user demands for more relevant information. The International Federation of Accountants (IFAC) emphasizes the importance of dialogue and innovation in the auditing field to maintain public trust.

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. IFAC Overview
Strengthening Organizations, Advancing Economies
Page 2 | Confidential and Proprietary Information

3. Page 3 | Confidential and Proprietary Information
IFAC Overview
• Supporting standards
development
• Improving quality and
capacity
• Supporting the profession
• Global representation and
advocacy

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. 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. 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. 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. Page 8 | Confidential and Proprietary Information
A Framework for Audit Quality
• Key elements of audit quality:
– Input
– Process
– Outputs
– Interactions
– Contextual factors

9. Page 9 | Confidential and Proprietary Information
Beyond Audits
• ISAE 3000 (Revised)
• Revision of standards for Review
and Compilation Engagements
• Monitoring reporting trends

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. 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. 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. 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. 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. 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. Will you join the global accountancy
community in Rome in November 2014?
www.wcoa2014rome.com
www.ifac.org