in particular in relation to significant qualitative aspects of the entity’s accounting practices, and significant difficulties encountered during the audit. (Paragraphs 62–64 provide further discussion of the impediments to the auditor providing additional information about the audited financial statements or the audit). 21 Users believe there would be value in more pertinent information in the auditor’s report about the financial statements and the audit. 35 36 37 38
The Framework for Achieving the Objective of Auditor Commentary Based on the value cited by users, the IAASB is of the view that the auditor could provide additional information to users tailored to the facts and circumstances of the entity, in a discrete and prominent section of the auditor’s report that would be referred to as Auditor Commentary. The overarching objective of such a new Auditor Commentary section in the auditor’s report is to provide transparency about matters that are, in the auditor’s judgment, likely to be most important to users’ understanding of the audited financial statements or the audit. Without modifying the auditor’s opinion, ISAs currently require, or otherwise allow, the auditor to include additional information in the auditor’s report to draw users’ attention to, in the auditor’s judgment: (a) Matters, although appropriately presented or disclosed in the financial statements, that are of such importance that they are fundamental to users’ understanding of the financial statements (referred to as “Emphasis of Matter” paragraphs); and (b) Any other matters that are relevant to users’ understanding of the audit, the auditor’s responsibilities or the auditor’s report (referred to as “Other Matter” paragraphs). Within the ISAs, there are specific circumstances for which Emphasis of Matter or Other Matter paragraphs are required. 12 Beyond those requirements, however, auditors are not explicitly required to consider whether these paragraphs should be included in the auditor’s report. Rather, ISA 706 13 essentially gives the auditor a mechanism by which to do so when considered necessary in the context of the particular engagement. Except where the auditor is required to include such paragraphs, their use in practice is rare – in fact, the ISAs note that a widespread use of Emphasis of Matter paragraphs may diminish the effectiveness of the auditor’s communication of such matters. However, users of the auditor’s report have expressed a view that these paragraphs are useful at directing their attention to what is most important within the financial statements or about the audit thereon. The new concept of Auditor Commentary is consistent with the existing concepts of Emphasis of Matter and Other Matter paragraphs. However, to better meet the information needs of users, Auditor Commentary builds upon these concepts by: J Lowering of the threshold for auditors to draw attention to certain matters
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