Enhancing auditor reporting

Enhancing auditor reporting

New auditor reporting requirements aim to give users more insight into key audit matters.

Global Head of Audit

KPMG in the U.S.


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The requirements will take different forms across the globe, but the goals are consistent.

For some time, there have been calls from users for the auditor’s report to provide more than a pass/fail opinion. 

In response to these calls, in January 2015 the International Auditing and Assurance Standards Board (IAASB) issued new requirements on auditor reporting, effective for December 2016 year ends.

Our publication Enhancing auditor reporting: Providing insight and transparency looks at what the new requirements could mean for a range of stakeholders.

Greater insight and transparency

Key audit matters for listed companies

Without changing the scope of an independent audit, the new requirements open the door for the auditor to give users more insight into the audit and improve transparency.

Auditors will be required to describe in the audit reports of listed companies the key areas they focused on in the audit and what audit work they performed in those areas (key audit matters).


“I have always felt that we, as auditors, had more insight that we could share with investors. The new international auditor reporting requirements give us the opportunity to do just that.”

Other changes in the auditor's report

Changes for all companies
  • Report reordered – opinion required to go first
  • Revised descriptions of management and auditor responsibilities
  • Description of work performed on other information such as the annual report


Further changes for listed companies
  • Description of key audit matters
  • Disclosure of the engagement partner’s name
  • Disclosure of other information not received before report date and of related auditor responsibilities

Different forms, but consistent goals

The exact timing and nature of the requirements may vary between jurisdictions, as auditor reporting requirements are generally based on local laws and regulations. Some jurisdictions have expanded auditor reporting requirements that are independent of the ISAs, such as the UK (introduced in 2013) and the EU. However, many base their local requirements on the ISAs. It is therefore important to find out the exact requirements and effective date for jurisdictions relevant to you. However, expect many jurisdictions, including the EU, to have requirements in place by December 2017. 

Why the changes matter

… to investors

Under the new requirements, investors will have access to information that was not previously available. They may wish to incorporate this information both in their evaluation of individual companies and when comparing companies.

They may also want to consider how this new information can be used to evaluate audit quality both within and across jurisdictions.

… to audit committees

The new requirements do not directly impose any requirements on audit committees. However, there will be increased interaction with the auditor regarding potential key audit matters.  Audit committees might also consider whether financial statement or other disclosures need refreshing, so that the auditor is not disclosing more information about an item than the company. Early and open communication with the auditor will help in this regard.

Next steps

Enhancing auditor reporting: Providing insight and transparency discusses how investors, audit committee members and company management may be affected by the new requirements, and lists some steps they may consider taking in preparation for the change.

It also shares KPMG member firm professionals’ experience of the factors that will be critical to achieving a successful implementation.

We hope that you find it a helpful starting point in understanding and preparing for the new-style audit reports. 

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