Australia's new auditing standards are expected to increase the cost and time required to complete an audit, but will improve quality and public confidence, according to a survey conducted by CPA Australia.
Australia's new auditing standards are expected to increase the cost and time required to complete an audit, but will improve quality and public confidence, according to a survey conducted by CPA Australia.
These views reflect responses from nearly 80 finance, accounting and business professionals and academics who took part in CPA Australia's Auditing Standards Briefing sessions in Sydney, Melbourne, Brisbane, Perth and Adelaide over the past two months.
CPA Australia Audit and Assurance Technical Adviser Jessie Wong said in a statement that, while several respondents wereconcerned about the potential to recover the increased costs, most felt that the changes would be worth the effort.
The majority of survey respondents provide audit and assurance services and of these, most were from small and medium accounting practices, with public sector employees also being surveyed.
Key findings of the survey are as follows:
- Nearly 80 per cent of survey respondents believe the new standards will improve audit quality, with 75 per cent expecting an increase in time taken to complete an audit.
- Nearly 7 out of 10 respondents anticipate an increase in audit costs, but the survey did not ask whether increased costs would mean increased fees for clients
- More than 3 out of 4 respondents believe regulators will benefit from the new standards
- Around two-thirds believe auditors, directors and investors will benefit.
'ASIC is seen to benefit from a more clearly defined role in the regulation of statutory audits,' said Ms Wong.
At least 60 per cent of the survey respondents believe the new standards will improve public confidence in financial reports, auditor's reports and auditors, but only 43 per cent expected improved confidence in Australian capital markets.
'These findings suggest the new standards will enhance confidence in auditors and the information most immediately connected to the audit. They also suggest, as we would expect, that audited financial reports are just one factor influencing public confidence in Australian capital markets,' said Ms Wong.
Impact of other audit-related CLERP 9 reforms
- In all cases the majority of respondents expect the survey's 11 audit-related CLERP 9 reforms to improve audit quality.
- The impact of the reforms on public confidence was more varied ranging from 36 per cent to 77 per cent.
- The new audit competency standard is the reform most respondents felt would improve audit quality (84.6 per cent).
- The extended reporting of significant breaches to ASIC by auditors is the reform most respondents felt would improve public confidence in financial reports (76.6 per cent).
'Business professionals see scope for the reforms to improve public confidence in audited financial reports. We'd like to see this reflected in the response from investors and the wider public,' said Ms Wong.
