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New Auditor Reporting Requirements are a Significant Step to Enhancing the Value of Independent Audit

January 22, 2015

On January 15 the International Auditing and Assurance Standards Board (the IAASB) published new and revised auditor reporting standards that represent a ‘significant change’ that enhances the nature of communications with stakeholders, according to KPMG.

The new requirements of the International Auditing and Assurance Standards Board (the IAASB) have been introduced to improve transparency and clarity regarding the auditor’s responsibilities when performing an audit, and regarding the information that auditors provide to users about the audit.

Commenting on the new reporting standards, Larry Bradley, KPMG’s Global Head of Audit, said: “For listed companies, the new requirements represent a significant change in auditor reporting. They introduce a level of transparency that can enable users to better recognize the value of an audit.”

The most significant change introduced is the requirement for auditors of listed companies to include in their auditor’s report descriptions of key audit matters, which are selected from matters discussed with company directors. The descriptions will outline why the auditor judged the matter to be one of most significance to the audit and how they addressed it. Bradley continued: “The introduction of these descriptions is a significant change in auditor reporting. They provide the means for the auditor to address user demand for more information on the audit.”

For all companies, the revised auditor’s report will include a statement outlining the auditor’s responsibilities for ‘other information’ and their findings, as well as revised descriptions of the auditor’s responsibilities and those of company management. For audits undertaken in accordance with International Standards on Auditing (ISAs), the new standard takes effect for annual periods ending in December 2016, although auditors can choose to apply it earlier.

Ashley Clarke, Head of Audit, KPMG in Kazakhstan and Central Asia, said: “Examples of the key audit matters which we may see in audit reports for Kazakh companies include the approach taken over the valuation of financial instruments (in particular for audit reports on banks with significant portfolios of impaired loans). Another area could be the auditor’s approach to assessing the completeness and accuracy of related party transactions, and ensuring that these have been adequately disclosed and accounted for in the financial statements. Finally, for companies in extractive industries with significant investments in plant and equipment, the approach to assessing assumptions used in impairment testing could merit particular attention by the auditor, and be included in their report to shareholders.”

About KPMG in Kazakhstan and Central Asia

KPMG is a global network of professional firms providing Audit, Tax and Advisory services, operating in 155 countries with more than 162,000 people working in member firms around the world.

KPMG has been working in Kazakhstan and Central Asia for more than seventeen years, and was rated as one of the leading audit and advisory firms in 2010-2013 by Expert Kazakhstan RA. Our essential principle has always been to use the firm’s global intellectual capital, combined with the practical experience of our local professionals. KPMG provides audit services as well as a wide range of advisory services covering tax and legal matters, performance improvement, risk management, transaction support, financing, and restructuring.

In Kazakhstan and Central Asia, KPMG now has offices in Almaty, Astana, Atyrau, and Bishkek with more than 400 active staff members.

For more information please contact:

Karlygash Kaltayeva, Head of Markets, KPMG in Kazakhstan and Central Asia

Tel.: +7 (727) 298 08 98 (ext 61136);

KKaltayeva@kpmg.kz

http://www.kpmg.com/