EBA欧洲银行-2013-11-21-28Letter-Mr-Gunn2C20IAASB-signed29_4页_285kb

EBA Comments on IAASB's Exposure Draft: Reporting on Audited Financial Statements

Core Content

The European Banking Authority (EBA) has provided detailed comments on the IAASB's Exposure Draft (ED) regarding the reporting on audited financial statements. The EBA supports the IAASB's initiative to improve auditor reporting, emphasizing the importance of transparency and quality in audit reports for the banking and financial industry. They believe that enhanced audit reports can contribute to market confidence and better oversight by those charged with governance.

Main Views

1. Scope of the ED

• The EBA recommends that the scope of the ED should cover all banks, not just listed entities, due to their critical role in financial stability.
• Bank audits often involve significant auditor judgment and challenges in obtaining audit evidence, especially in areas like loan impairment and fair value accounting estimates.
• More extensive reporting in these areas could enhance audit quality and oversight.

2. Ordering of Elements in the Auditor's Report

• The EBA supports the proposed clarification of the report's structure to improve understanding for users.
• They welcome the change from the ITC that no longer mandates the ordering of elements.
• However, they reiterate the need for the auditor's opinion to be placed at the beginning of the report to ensure its prominence.

3. Key Audit Matters (KAMs)

• The EBA supports the inclusion of KAMs in the audit report as they can increase transparency and usefulness for users.
• They suggest that the objective of KAMs in ISA 701 should be more clearly defined, emphasizing the importance of information for users' understanding of significant matters.
• There is a concern regarding the interaction between ISA 701 and ISA 706, especially in cases where matters of fundamental importance could be both KAMs and Emphasis of Matter (EoM) paragraphs.
• The EBA believes that KAMs should be entity-specific, avoiding generic or abstract descriptions in standardized language.
• They also recommend that some texts from paragraphs A31 and A38 of ISA 701 be included in paragraph 10 to ensure a more consistent and comprehensive description of KAMs.

4. Going Concern

• The EBA supports the inclusion of a separate section in the audit report addressing the going concern assumption.
• They are concerned about the negative tone in paragraph 20 of ISA 570 (Revised), which states that neither management nor the auditor can guarantee the entity's ability to continue as a going concern.
• The EBA recommends redrafting this statement to avoid undermining the perceived quality of the audit.
• They also suggest that the revised ISA 570 could be further developed with specific guidance to require more detailed information about audit work performed in relation to going concern matters.

5. Compliance with Independence and Ethical Requirements

• The EBA agrees with the disclosure of the source(s) of independence and other relevant ethical requirements in the auditor's report.
• This disclosure increases transparency and reinforces the importance of auditor independence.
• It is believed that such transparency can increase user confidence in the audit process.

6. Disclosure of the Engagement Partner's Name

• The EBA supports the requirement to disclose the name of the engagement partner in the audit report, as this is already mandated under the EU legislative framework.
• This enhances transparency and promotes personal responsibility and accountability among engagement partners.
• The EBA recommends extending this requirement to all bank audits, not just listed entities.

Key Information

• The EBA supports the IAASB's project on improving auditor reporting, particularly through the introduction of ISA 701 and revised ISAs.
• They emphasize the need for consistency in application and higher quality reporting.
• The EBA calls for further development of some proposals to ensure clarity and effectiveness.
• They advocate for greater convergence of international auditing standards to strengthen market confidence in the audit profession.

Conclusion

The EBA's comments highlight the importance of enhancing transparency and quality in auditor reporting, especially for banks. They support the IAASB's efforts but suggest that the proposals need refinement to ensure they are applied consistently and effectively across all types of bank audits.