Publication

On 18–19 November 2014, members of the European Audit Committee Leadership Network (EACLN) met in Paris for their 22nd stand-alone meeting. In one session, they were joined by Professor Arnold Schilder, chairman of the International Auditing and Assurance Standards Board (IAASB), and Dan Montgomery, deputy chair of the IAASB.   
This ViewPoints presents a summary of the key points, along with background information and selected perspectives that members and subject matter experts shared before and after the meeting.   

Professor Schilder, Mr Montgomery and EACLN members discussed the role of the IAASB and aspects of its activities that are of particular interest to audit committees:

• The IAASB and its role
  The IAASB, a private organization, serves as the chief global standards setter for audit and assurance.  Its oversight body, the Public Interest Oversight Board, ensures that the IAASB’s process for setting standards is open, inclusive and independent.  The IAASB’s International Standards on Auditing have been adopted by over 100 national standards setters.

• Auditor responsibility for information beyond the financial statements
  Commenting on the IAASB’s proposed standard regarding how auditors should address information outside the audited financial statements, EACLN members urged the IAASB to consider information beyond the company’s annual report, including press releases, interim reports and management presentations.  Given the importance of this information to investors, some level of assurance by the auditor would be valuable, though members noted that the IAASB will need to evaluate this possibility in cooperation with regulators.

• Enhancing auditor reporting
  Members endorsed the objectives of the recently finalized standards on auditor reporting, including the provisions for reporting on “key audit matters.”  Those who have already experienced some form of enhanced auditor reporting said that it has strengthened the relationship between the auditor and the audit committee.  At the same time, however, members stressed the importance of a holistic approach to disclosure that considers reporting by the auditor, management and the audit committee.

• Integrated reporting and data analytics
  Building on the consultation of the International Integrated Reporting Council, the IAASB will assess whether new auditing standards in the area of integrated reporting are necessary or existing standards can suffice.  The IAASB will also study the use of data analytics by audit firms and their clients to determine whether existing standards on topics such as audit evidence and sampling are blocking innovation and need to be revised.