According to the firm, the changes, introduced by the IAASB, centre around three key aims: insight, transparency and improved readability.
“The most significant innovation is the introduction of ‘key audit matters’ (ISA 701). This section will shed light on those matters that, in the auditor’s judgement, were of the most significance in the audit of the financial statements of the current period,” said a statement from the firm.
“The main proposals to enhance transparency are to introduce an explicit statement regarding the auditor’s independence in all audit reports and to identify the engagement partner’s name in audit reports for listed entities. Both are already part of the auditor’s report in Australia – but it is not the practice everywhere.
“The auditor’s report has been restructured to put audit and entity-specific information at the front of the report, in particular putting the audit opinion first. The descriptions of the auditor's responsibilities and what's involved in the audit have also been clarified, for example, they can be placed at the end of a report.”
PwC Australia Assurance leader Peter van Dongen said the standards are an important step in helping to reinforce trust in the audit.
"They mark a move to reports that are more informative, discursive and insightful and will no doubt stimulate better conversations among auditors, companies, audit committees, shareholders and regulators,” he said.
All changes to the Australian Auditing Standards, once finalised, will be effective for financial reporting periods commencing on or after 1 January 2016. However auditors and companies will need to prepare ahead of implementation as some changes will require careful navigation.
“The new standards will be as new to management, audit committees and users as they are to auditors. Around the world we will be on a learning curve and we encourage feedback so that we can continue to improve the relevance of audit reports," Mr van Dongen said.
"At PwC we are committed to producing more informative and insightful reports and we are determined to build on this good start to help lift the game for Australia’s capital markets,” he added.