We commissioned the University of Auckland to undertake research into reporting practices for Key Audit Matters (KAMs) to assess how the standard has been applied in recent years.
The research reviewed 235 audit reports across a broad range of industry and entity types and assessed:
Number and type of KAMs
Whether KAMs are generic or entity specific
Length and reading ease
Voluntary reporting
The research shows that the number of KAM’s has stayed relatively stable and on average, each audit report contained two KAMs. The majority of KAMs reported also tended to be recurring.
In terms of understandability, about half of the reports contained KAMs that may not be easily understood by all users. We recognise that KAMs are often about the most complex areas within financial statements but encourage auditors to continue to explore ways to enhance the communicative value and understandability of KAMs. Read the reporthere.
Update: Not-for-Profit and Public Sector Reporting
Our recentconsultationon proposed changes to Tier 3 & 4 Not-for-Profit and Public Sector reporting attracted a number of submissions which we are now analysing. Key themes include:
Broad support to simplify the Tier 4 Standard to make it easier for small entities to apply
Endorsement for proposed improvements to the Tier 3 Standard such as greater transparency on accumulated funds held
A desire for more guidance to support consistent application
As always, we are focused on balancing ease of reporting with user needs. We will be discussing the feedback at the December Accounting Standards Board meeting and an improved Tier 4 standard and revised Tier 3 standard are expected to be issued in early 2023. Submissions can be viewedhere.
Project update - Ngā pou o te kawa ora
Our project to establish a voluntary, non-financial reporting framework from an Aotearoa New Zealand perspective, is gathering momentum. Phase one of this project is focused on understanding the specific reporting needs of Māori reporting entities to inform the development of the framework. A series of regional wānanga have been held so far in Auckland, Rotorua, Wellington and Napier - many thanks to the Te Arawa Lakes Trust who hosted the Rotorua wānanga. Further in-person wānanga and online ‘zui’ (zoom hui) are scheduled for Northland, Auckland, Nelson and Christchurch.
In brief
Events
Not-for-Profit Service Performance Information Webinar23 November
Launch of the Tiers 3 & 4 Not-for-Profit and Public Sector consultation, decision on non-assurance services, and Climate-related Disclosure consultation closed.
Positive feedback following climate consultation, Mixed views on Less Complex Entities auditing standard, Improving Not for Profit reporting requirements
Climate consultation in full swing, New Quality Management Standards, Feedback sought on IFRS 9 application issues, Changes to statutory reporting and audit size thresholds
