Proposed IAASB standard seeks to clarify expectations for auditing disclosures

BY KEN TYSIAC

Changes to international auditing standards proposed last week by the International Auditing and Assurance Standards Board (IAASB) are designed to clarify expectations of auditors when auditing financial statement disclosures.

One of the key areas addressed in the proposals is attention earlier in the audit process to disclosures, including those where the information is not derived from the accounting system.

By focusing on this area, the IAASB aims to address the problem of excessive or immaterial disclosures that may occur when disclosures are prepared and audited relatively late in the audit process, IAASB Technical Director James Gunn said in a news release.

The proposals—including those intended to enhance focus on disclosures in the early stages of the audit—may result in additional focus by companies on their financial statement preparation process and improve the quality of disclosures, the IAASB said in the proposal’s explanatory memorandum.

“Financial reporting disclosure requirements and practices have evolved, and disclosures now provide more decision-useful information that is often more narrative and subjective in nature,” IAASB Chairman Arnold Schilder said in a news release. “This gives rise to challenges from an auditing point of view, and the proposals enhance certain areas in the [international standards] to support the proper application of the standards’ requirements.”

Comments can be made through Sept. 11 at the IAASB’s website.

Ken Tysiac ( ktysiac@aicpa.org ) is a JofA senior editor.

SPONSORED REPORT

Get your clients ready for tax season

Upon its enactment in March, the American Rescue Plan Act (ARPA) introduced many new tax changes, some of which retroactively affected 2020 returns. Making the right moves now can help you mitigate any surprises heading into 2022.

100th ANNIVERSARY

Black CPA Centennial, 1921–2021

With 2021 marking the 100th anniversary of the first Black licensed CPA in the United States, a yearlong campaign kicked off to recognize the nation’s Black CPAs and encourage greater progress in diversity, inclusion, and equity in the CPA profession.