1. APB research into Improving the Audit Report

2. Responses to “Promoting Audit Quality” Auditing profession appeared comfortable with current approach Auditing profession appeared comfortable with current approach User groups expressed concerns: User groups expressed concerns: –Overly legalistic – too many caveats –Opinion should appear earlier –Should be more informative regarding Estimates Estimates Judgments Judgments Sufficiency of evidence Sufficiency of evidence Uncertainties Uncertainties

3. APB’s response (1) THE AUDITORS REPORT: A TIME FOR CHANGE? DECEMBER 2007

4. The Auditor’s Report: A Time for Change? Explained the evolution of the current report Explained the evolution of the current report Described ‘the changing scene’ Described ‘the changing scene’ Offered a number of alternative reports to help stimulate debate Offered a number of alternative reports to help stimulate debate

5. Alternative Reports Alternative Reports Example 1:Fully compliant with ISA 700 (Revised) Example 1:Fully compliant with ISA 700 (Revised) Example 2: ISA 700 (Revised) “Lite” Example 2: ISA 700 (Revised) “Lite” Example 3: Minimum report that complies with CA 2006 Example 3: Minimum report that complies with CA 2006

6. Feedback on The Auditors Report : A Time for Change Views varied by Stakeholder Group Views varied by Stakeholder Group Institutional Investors Institutional Investors –audit reports should be more informative –favoured reduction in current ‘boiler plate’ Companies Companies –favoured reduction in the ‘boiler plate’ –did not support added ‘narrative’ Auditors Auditors –wanted to achieve compliance with ISAs –wanted to retain ‘Bannerman’ –many, but not all, wanted to maintain the status quo

7. APB’s response (2) THE AUDITORS REPORT: A TIME FOR CHANGE? ISA (UK & IRELAND) 700 REVISED DECEMBER 2007SEPTEMBER 2008

8. APB’s Response (2) Facilitate shortened versions of auditor’s report (Example 2) by including ‘boilerplate’ wording on auditor responsibilities and scope of audit on APB website. Facilitate shortened versions of auditor’s report (Example 2) by including ‘boilerplate’ wording on auditor responsibilities and scope of audit on APB website. Prepare changes to ISA (UK & Ireland) 700 to allow cross reference to APB website and still be compliant with ISA 700 Prepare changes to ISA (UK & Ireland) 700 to allow cross reference to APB website and still be compliant with ISA 700 Prepare other changes to auditor’s report to Prepare other changes to auditor’s report to –Reflect CA 2006 –State compliance with APB Ethical Standards –Separate the true and fair view opinion from other legal responsibilities (the 2 part report) Initiate research into what additional ‘narrative’ information should be included Initiate research into what additional ‘narrative’ information should be included