Global Financial System for Critical Audit Matter -myassignmenthelp

Question: Discuss about theGlobal Financial System for Critical Audit Matter. Answer: Introduction This assignment is about the recently changed audit models of the U.S public accounting oversight board. The changed model now requires the auditors to present the high risk area of business in the audit report itself. An auditor is a person, who inspects the accounts of the company or an organization and detects if there is any wrong entry of financial or non financial transactions has been done or skipped purposely to bring the actual true financial condition or financial report of the company to the interested peoples(Glenda Marty, 2010). An audit is done by a certified accountant or an auditor, in this assignment we are going to discuss in detail the need of auditing and the auditing models changed in the PCAOB. Key Changes to Audit Report with Focus on Similarities As Well As Any Differences The international auditing and assurance standards board (IAASB) is an international auditing standard body that is working internationally. This body of international auditing standards was set in 1978 march, and it is working on stabilizing the global financial system, enhancing the role, relevance and quality of assurance and implementation of auditing standards(Philips, 2014). The public company accounting board is similar to that of IAASB; however it is a private sector and a nonprofit corporation that works in keeping an eye on the work of the public companies to protect the interest of the investors(Mehta, 2013). Recently the PCAOB has made some changes into the auditing report models, these changes suggested that the auditors have to disclose the areas of high audit risk to in the audit report. The recent changes of the PCAOB now require the auditors report to be more specific and more relevant and to provide more additional information about the audit to the client. The newl y developed standard now requires the auditor to communicate the critical audit matters (CAM) for audits that are conducted under the standards of PCAOB. Critical audit matter (CAM) are the matters that comes out while conducting an audit and these matters are now according to the new changes are required to be communicated to the client. An auditor for determining the critical audit matters will require working upon the audit risk assessment, unusual significant transactions etc. if in case there are no critical audit matters the auditor will prepare a disclosure stating that no critical audit matter occurred while conducting the audit(Sherlotte, 2015). Another change that has been made by the public company accounting oversight board is that, the auditor now will have to state that when and in which year the audit began and when it ending it comes under the tenure. Third major change made in by PCAOB is the independence of the auditor; this change means that the audit report will include a statement stating that the auditor must be independent. Another major change is the address; the auditors report will be addressed to the companys share holders and to the board of directors(Katz, 2017). Now if we talk about the similarities or the differences between the standards of the international auditing assurance standard board and the public company accounting oversight board then these are as follow: We will first talk about the similarities between the IAASB and the PCAOB(Hesabras, 2017): KAM/CAM is those matters that arise when the audit is conducted by a certified auditor and these matters are of much importance for the company that the auditor wants to put before everything. Now there is a similarity between this standard of IAASB PCAOB as both states that KAM/CAM requires to put forward matters of more importance in the auditing report and there is also a similarity of preparing the pattern of the KAM/CAM in the IAASB and PCAOB. Documentation of important or critical matters is required under IAASB and PCAOB, whether or not the matter is considered to be a KAM/CAM. Similarity here is that both the auditing standard bodies requires to document matters that are of significant nature. The ordering of basis for opinion and opinion section in IAASB is done by presenting opinion section first following to it the basis for opinion section, in PCAOB the ordering is of basis of opinion and opinion section is as same as international auditing and assurance standard board. Now we will talk about the differences between the IAASB PCAOB standards: The tenure of the auditors is not being disclosed in the IAASB, whereas the date of starting the tenure of the auditor needs to be disclosed in the report in public company accounting oversight board. In IAASB the responsibilities of the auditor are expanded, these responsibilities needs to be prepared in a separate section of auditors report. While if we talk about Public company accounting oversight board, the responsibilities of the auditors needs to be mentioned not in a separate section but in a the basis of opinion section. Reasons/Motivation for the Changes The changes made in the auditing models of PCAOB are made for the first time in the 70 years since its establishment. This is the first and the most important motivation or the reason behind the changes made to the audit report by the PCAOB. The investors of the firm seek for more and more information from the company about its profits or loss and about other things as well. The members of PCAOB said in a statement that the main purpose of changing the audit report was to prepare informative, accurate and independent audit reports. Impact of the changes in Audit Reporting The changes made in public company accounting oversight board will pump life into the audit reports made by the auditors and the investors will get all the information they have been asking from the auditors from a long time(R.Doty, 2017). The changes are likely to protect the interest of the investors by providing them an accurate and an appropriate report about the financial condition of the firm. These changes made in the PCAOB models for auditing will not only protect the interest of the investors but it is going to increase the working responsibilities of the investors and more transparency will come into the process of auditing. Bibliography Glenda Marty. (2010). The Work responsibilities of an Auditor (Vol. 1). Bath: London Works and Press. Hesabras. (2017, July 1). Retrieved July 1, 2017, from Hesabras: https://www.hesabras.com/Content/media/filepool3/2017/8/569.pdf Katz, D. M. (2017, June 1). CFO. Retrieved 2014 5, 2015, from An Agryle Company : https://ww2.cfo.com/auditing/2017/06/pcaob-auditors-report/ lotey, i. (2010). skill in businesses. In g. garg, business skills (pp. 145-166). Garg Publishers. Mehta, H. (2013). Changes Made in the Auditing Structure of the PCAOB. In J. Harish, The Standards of PCAOB (pp. 119-130). Amsterdam: Geo Publishers. Philips, J. M. (2014). The Standards of IAASB. In D. o. board, Australian Auditing (13th ed., pp. 85-112). sydney: Wolter Kluver. R.Doty, J. (2017, June 1). PCAOB. Retrieved 2017 2017, from Public Company Accounting Oversight Board: https://pcaobus.org/News/Releases/Pages/auditors-report-standard-adoption-6-1-17.aspx Reserve Bank of Australia. (2017). Retrieved September 2017, from https://www.rba.gov.au/monetary-policy/about.html Sherlotte, D. (2015). New Auditing Standards. New York Business world , 5 (115), 10.