Although the Auditing and Assurance Standards Board (AUASB) is yet to officially publish new auditing standards, Downer has followed the principles established by the International Auditing and Assurance Board, as well as prior examples of dual-UK listings in issuing such a report. The audit report was prepared by KPMG
Enhanced audit reports are “at the forefront of audit thinking”, according to Duncan McLennan, KPMG's national managing partner for audit.
Mr McLennan noted the rise of company-specific audit reports since the GFC, saying “investors have been calling for more than just a binary pass/fail opinion”.
“These reports enable auditors to provide greater insight into the company-specific nature of our work”, he said.
In keeping with this new thinking in corporate reporting, the length of the report itself is 20 per cent shorter than the previous year, an attempt to reduce the strain on readers and to increase accessibility to the accounts.
“Cutting the clutter… responds to concerns long expressed globally about the increasing length and complexity of annual reports, which have tended to confuse rather than enlighten readers”, Mr McLennan added.
The move by Downer is one set to be mirrored by several other KPMG clients. “We have other clients who are piloting drafts of the new look audit report and we expect a number of similar reports to be issued in this reporting season”, said Mr McLennan.
KPMG also has advice for any companies seeking to incorporate such an audit report in their own results: “We would advise audit committees to have an open dialogue with their auditors on what they consider to be the key audit matters well before the implementation date,” KPMG said.
Mr McLennan applauded the decision of Downer to take this step forward. “Downer has significantly reduced the length of the report, without losing anything important, and has been able to draw investors’ attention to issues that really matter,” he said.
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