United States

Changes address auditing financial statement disclosures


The International Auditing and Assurance Standards Board recently issued Addressing Disclosures in the Audit of Financial Statements-Revised ISAs and Related Conforming Amendments. The revisions are intended to enhance the requirements in various International Standards on Auditing (ISAs) to specifically address financial statement disclosures. The amendments also provide additional guidance to assist auditors in better applying the requirements relating to disclosures. ISAs affected by the changes include the following, among several others:

  • ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment – Emphasizes that the required understanding of the information system includes those relevant aspects of that system relevant to information disclosed in the financial statements that is obtained from within or outside of the general and subsidiary ledgers.
  • ISA 330, The Auditor’s Responses to Assessed Risks – Strengthens procedures around the reconciliation of the financial statements to emphasize that this includes information from within or outside of the general and subsidiary ledgers.  Requires consideration of the classification and description of financial information and the underlying transactions, events and conditions, and the presentation, structure and content of the financial statements.
  • ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements – Requires auditors to consider the relevance and understandability of the disclosed accounting policies. Also requires auditors when evaluating the financial statements to consider completeness, classification, aggregation and disaggregation, characterization and whether material information has been obscured.

The changes are effective for audits of financial statements for periods ending on or after December 15, 2016.