Audit reports - field testing a bold idea

Audit reports - field testing a bold idea

The new 'long-form' audit report represents a substantial change in audit reporting. Tony Cates explains why he sees it as a positive step.


Partner and Head of International Markets and Government

KPMG in the UK


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The new 'long-form' audit report is the biggest change in audit reporting I've seen in my professional career and one I am really positive about. Back in November, we asked if the new report was a long term solution or whether we could go further. We also said that we were committed to innovation, and that's what we have done.

Beyond the minimum requirements  

We have put our commitment to the test by issuing a small number of ‘long form’ audit reports that extend beyond the minimum requirement: audit reports that do not just say what we did in the risk areas, but also say what we found. And we haven’t done this on a mocked-up, illustrative example. They are real, ‘live’ reports to the companies’ shareholders. 

In our update “Audit reports – field testing a bold idea” (PDF 1 MB) I explore this innovation in more detail and say that we need a debate about whether this is the future of audit reports.  

That debate needs to involve all the stakeholders: the investor community, as they are the shareholders for whom the report is written, and company boards, as the audit is about facilitating the relationship between companies and their shareholders. We also need buy-in from regulators, who would need to revise their standards to require these reports more widely. 

Issues to consider  

There are plenty of issues to think about:  

  • To be valuable, findings would need to be graduated, rather than binary (acceptable vs not-acceptable) – but consistently communicating such ‘gradings’ would not be easy. 
  • For companies, would it be a demonstration of commitment to good governance?
  • Or would it slide into replacing the board’s accounting judgments with the auditor’s?
  • How do we overcome barriers around commercially sensitive information?
  • In a voluntary regime, would there be risk that shareholders would draw the wrong conclusion about companies that didn’t volunteer? 

So I’d be grateful if you would take a few minutes to read through the update, and perhaps leave a comment or view on this page. I appreciate that these are sensitive issues and that the debate might be lively or even disruptive, but I welcome that. There’s no progress without taking the risk of a wrong turn.  

Tony Cates - Head of Audit at KPMG in the UK   

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This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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