AQF outlines audit report recommendations

News Article - 02 February 2007
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Audit reports are becoming too "standardised" and should be compiled within a defined framework, the Audit Quality Forum has said (AQF).

The working group was given the task of considering whether the way audit reports are worded meets the needs of shareholders and whether all important information is being included.

A report issued by the AQF suggests that audit accounts should include a statement of opinion in line with the structure and wording of section 495(3) of the Companies Act 2006 and a positive paragraph to highlight that account records had been kept to a sufficient standard.

In addition, reports should also include a statement expressing that there are no matters to which the auditor would like to draw attention, in accordance with section 235(2A)(b) of the Companies Act 1985 or section 495(4)(b) of the 2006 version.

Opinion should be moved to the beginning of the report while standardised boilerplate text should be listed further on in the account or as an appendix, the group suggests.

Richard Reid, chairman of the AQF Working Group on Audit Reports said: "On one hand, investors would like to understand more about the key issues and discussions that take place during the course of the audit.

"On the other hand, auditors are constrained by case law and clauses around confidentiality, legislation and auditing standards. But at the crux of all of this was also the impact on business."

The forum is made up of representatives from the regulatory, business, audit and investment sectors with the aim of promoting constructive dialogue to generate ideas.

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