HARARE: The Zimbabwean corporate world is poised for increased transparency in its operations and disclosure of key financial information in line with new global standards for enhanced auditor reporting.
The changes to the auditor’s report aim to give users of financial statements more insight into the audit to improve transparency and enhance nature of communication between stakeholders and auditors.
According to KPMG Chartered Accountants, the new and revised audit report standards published in January this year are effective from January 1, 2016 and new financial statements for 2016 year should reflect the new changes to the new audit reporting.
The Public Accountants and Auditor’s Board has decided that the new rules will apply to public interest entities such as listed entities, financial institutions, insurance companies, parastatals, pension funds “Auditors may voluntarily, or at the request of management communicate key audit matters for entities other than listed entities.
“In Zimbabwe PAAB has decided it will apply to public interest entities (eg listed entities, financial institutions, insurance companies, parastatals, pension funds). Most regulators want the long form report for their domains,” KPMG said.
It is expected that the enhanced audit reporting will help attract more foreign direct investment, more robust interaction between users, auditors, communicators and those charged with corporate governance and increased attention by management.
Further, the changes to the audit reporting will lead to increased professional skepticism in areas where key audit matters are identified, increased audit quality or users’ perception of audit quality and will also go beyond the current binary audit report format.
There will not be changes to the current scope of an independent audit, but there have been calls by some regulators for early adoption of the changes to the audit reporting for more disclosure.
Subtle changes include revised descriptions of auditor and management responsibilities, descriptions of work by the auditor on other information and the findings. For listed firms, this entails description of key audit matters, disclosure of engagement partner’s name and that of the preparer of financial statements.
There will be need for explicit description of the responsibilities of management and the auditor in all auditor’s reports, separate section, “Material Uncertainty Related to Going Concern,” when a material uncertainty exists while the new requirement will challenge adequacy of disclosures for going concern “close calls”.
