Auditing Standard ASA 2017-1 Amendments to Australian Auditing Standards

Administered by Department of the Treasury

Legislation au F2017L00693 In force Legislative Instrument

Legislation content

 

 

 

ASA 2017-1

(May 2017)

 

 

Explanatory Statement

 

 

Auditing Standard ASA 2017-1 Amendments to Australian

Auditing Standards

 

 

Issued by the Auditing and Assurance Standards Board

 

Obtaining a Copy of this Explanatory Statement

 

This Explanatory Statement is available on the Auditing and Assurance Standards Board (AUASB)

website: www.auasb.gov.au

 

Contact Details

 

Auditing and Assurance Standards Board

Podium Level

Level 14, 530 Collins Street

Melbourne  Victoria   3000

AUSTRALIA


Phone:  (03) 8080 7400

E-mail: enquiries@auasb.gov.au

 

Postal Address:

PO Box 204

Collins Street West

Melbourne  Victoria   8007

AUSTRALIA

 

 

Reasons for Issuing Auditing Standard ASA 2017-1

 

The AUASB issues Auditing Standard ASA 2017-1 Amendments to Australian Auditing Standards

pursuant to the requirements of the legislative provisions and the Strategic Direction explained below.

 

The AUASB is a Non Corporate Commonwealth Entity of the Australian Government established under section 227A of the Australian Securities and Investments Commission Act 2001, as amended

(ASIC Act).  Under section 336 of the Corporations Act 2001, the AUASB may make Auditing

Standards for the purposes of the corporations legislation.  These Auditing Standards are legislative instruments under the Legislative Instruments Act 2003.

 

Under the Strategic Direction given to the AUASB by the Financial Reporting Council (FRC), the AUASB is required, inter alia, to develop auditing standards that have a clear public interest focus and are of the highest quality.

 

Purpose of Auditing Standard ASA 2017-1 Amendments to Australian Auditing

Standards

 

The purpose of the Auditing Standard is to make amendments to the Auditing Standards listed below.

 

Main Features

 

This Auditing Standard makes amendments to the following Auditing Standards:

 

ASA 210 Agreeing the Terms of Audit Engagements (27 October 2009)

 

ASA 700 Forming an Opinion and Reporting on a Financial Report (1 December 2015)

 

ASA 701 Communicating Key Audit Matters in the Independent Auditor’s Report (1 December 2015)

 

ASA 800 Special Considerations – Audits of Financial Reports Prepared in Accordance with Special Purpose Frameworks (26 July 2016)

 

ASA 805 Special Considerations – Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement (26 July 2016)

 

 

 

Operative Date

 

ASA 2017-1 Amendments to Australian Auditing Standards is operative for financial reporting periods ending on or after 15 December 2016.

 

Process of making Australian Auditing Standards

 

The AUASBs Strategic Direction, inter alia, provides that the AUASB develop Australian Auditing

Standards that:

 

 have a clear public interest focus and are of the highest quality;

 

 use the International Standards on Auditing (ISAs) of the International Auditing and

Assurance Standards Board (IAASB) as the underlying standards;

 

 conform with the Australian regulatory environment; and

 

 are capable of enforcement.

 

Consultation Process prior to issuing the Auditing Standard

 

The AUASB has consulted publicly as part of its due process in developing the Auditing Standard.

 

The amendments to ASA 700 and ASA 701 were included in Exposure Draft 07-16 Amendments to Australian Auditing Standards (ED 07-16), which was issued on 22 December 2016, with a 30 day comment period.

 

Submissions were received by the AUASB and were considered as part of the development and finalisation of the Auditing Standards.

 

The amendments to ASA 210, 800 and 805 are not significant and it was not considered necessary to consult publicly on these matters.

 

Regulatory Impact Statement

 

A Regulatory Impact Statement (RIA) has been prepared in connection with the preparation of

ASA 2017-1 Amendments to Australian Auditing Standards. The RIA is has been cleared by the Office of Best Practice Regulation (OBPR).

 

 

 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Legislative Instrument: Auditing Standard ASA 2017- 1 Amendments to Australian

Auditing Standards

 

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)

Act 2011.

 

Overview of the Legislative Instrument

 

Background

 

The AUASB is Non Corporate Commonwealth Entity of the Australian Government established under section 227A of the Australian Securities and Investments Commission Act 2001, as amended

(ASIC Act).  Under section 336 of the Corporations Act 2001, the AUASB may make Auditing

Standards for the purposes of the corporations legislation. These Auditing Standards are legislative

instruments under the Legislative Instruments Act 2003.

 

Purpose of Auditing Standard ASA 2017-1

 

The purpose of ASA 2017-1 is to make amendments to various Australian Auditing Standards.

 

Main Features

 

This Auditing Standard makes amendments to the following Auditing Standards:

 

ASA 210 Agreeing the Terms of Audit Engagements (27 October 2009)

 

ASA 700 Forming an Opinion and Reporting on a Financial Report (1 December 2015)

 

ASA 701 Communicating Key Audit Matters in the Independent Auditor’s Report (1 December 2015)

 

ASA 800 Special Considerations – Audits of Financial Reports Prepared in Accordance with Special Purpose Frameworks (26 July 2016)

 

ASA 805 Special Considerations – Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement (26 July 2016)

 

 

Human Rights Implications

 

The Auditing Standards are issued by the AUASB in furtherance of the objective of facilitating the Australian economy.  The standards do not diminish or limit any of the applicable human rights or freedoms, and thus do not raise any human rights issues.

 

Conclusion

 

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

Overview

The Auditing and Assurance Standards Board (AUASB) introduced Auditing Standard ASA 2017-1 Amendments to Australian Auditing Standards in 2017. This legislation, established under section 227A of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001, aims to amend various Australian Auditing Standards, including ASA 210, ASA 700, ASA 701, ASA 800, and ASA 805. The amendments are designed to align the standards with the International Standards on Auditing (ISAs) of the International Auditing and Assurance Standards Board (IAASB), ensuring they are of the highest quality and have a clear public interest focus. The AUASB developed these standards following a consultation process and in accordance with the Strategic Direction provided by the Financial Reporting Council (FRC). The Legislative Instrument is compatible with human rights, as it does not diminish or limit any applicable human rights or freedoms, thereby not raising any human rights issues.

Scope and Application

The Auditing Standard ASA 2017-1 Amendments to Australian Auditing Standards, issued by the Auditing and Assurance Standards Board (AUASB), amends various Auditing Standards, including ASA 210 Agreeing the Terms of Audit Engagements, ASA 700 Forming an Opinion and Reporting on a Financial Report, ASA 701 Communicating Key Audit Matters in the Independent Auditor’s Report, ASA 800 Special Considerations – Audits of Financial Reports Prepared in Accordance with Special Purpose Frameworks, and ASA 805 Special Considerations – Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement. The amendments apply to financial reporting periods ending on or after 15 December 2016. The AUASB, a Non Corporate Commonwealth Entity established under the Australian Securities and Investments Commission Act 2001, has the authority to make these Auditing Standards under the Corporations Act 2001, and they are legislative instruments under the Legislative Instruments Act 2003. The AUASB was directed by the Financial Reporting Council to develop these Auditing Standards to ensure they focus on the public interest and are of the highest quality, use the International Standards on Auditing as underlying standards, conform with the Australian regulatory environment, and are capable of enforcement. The amendments to ASA 700 and ASA 701 were subject to public consultation, while the changes to ASA 210, 800, and 805 were deemed not significant enough to warrant public consultation. The Legislative Instrument is compatible with human rights as it does not diminish or limit any applicable human rights or freedoms.

Key Provisions

Auditing Standard ASA 2017-1 (ASA 2017-1) Amendments to Australian Auditing Standards, issued by the Auditing and Assurance Standards Board (AUASB), amends various existing Australian Auditing Standards. The key sections involved in these amendments include ASA 210, ASA 700, ASA 701, ASA 800, and ASA 805. These amendments are effective for financial reporting periods ending on or after 15 December 2016. ASA 210, which pertains to agreeing the terms of audit engagements, has been amended to enhance clarity and specificity in the documentation of the terms of the audit engagement. ASA 700, concerning forming an opinion and reporting on a financial report, has been updated to refine the auditor's responsibility in providing a clear and concise report. ASA 701, which deals with communicating key audit matters in the independent auditor's report, has been amended to better define the process for identifying and communicating these key matters to stakeholders. ASA 800 and ASA 805, which address special considerations in audits of financial reports prepared in accordance with special purpose frameworks and audits of single financial statements, respectively, have also been updated to improve the standards' clarity and applicability. The amendments impose specific obligations on auditors and audit firms to ensure compliance with the updated standards. Auditors must now document the terms of the audit engagement more thoroughly under ASA 210. Under ASA 700 and ASA 701, auditors are required to provide a more detailed and transparent report, including the identification and communication of key audit matters. ASA 800 and ASA 805 require auditors to apply specific considerations when auditing financial reports prepared under special purpose frameworks or single financial statements. These obligations aim to enhance the quality and reliability of audit reports, thereby improving transparency and accountability in financial reporting. Failure to comply with the provisions of ASA 2017-1 may result in various consequences. While the amendments themselves do not specify particular offences or penalties, non-compliance with the Auditing and Assurance Standards Board's standards can lead to disciplinary actions by professional bodies, reputational damage, and potential legal liabilities for auditors and audit firms. Additionally, companies relying on non-compliant audit reports may face scrutiny and penalties from regulatory authorities, such as the Australian Securities and Investments Commission (ASIC). The precise penalties for non-compliance can vary depending on the severity and impact of the breach, but they may include fines, sanctions, or other enforcement actions deemed appropriate by the relevant authorities.

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