Significant business risks, accounting or commercial errors, as well as inappropriate management decisions can all be scrutinised as a result of a thorough and complete audit.
Beyond the figures, there must be a connection, through reports and explanations related to them, between the auditor and the auditee. The way both parties operates are changing as we speak, given the significant changes in legislation.
The Law on statutory audit of standalone and consolidated financial statements has been issued and it is applicable starting on the 3rd day from publication in the Official Gazette 548/ July 12 2017.
The wave of change in the field, promoting more transparent and tailored reports to the audited companies, came from the beneficiaries of the audits: shareholders, boards and investors, the ones most interested in “reading” among or beyond the auditor’s reports.
After almost a decade after the latest legislative update (2008), new international audit standards have been revisited and published, and are already considered to be much closer to economic reality and bringing considerably greater transparency. From this point of view, after an experience of more than 20 years in the field, I think the qualitative jump is significant. Particularly when we talk about audit reporting.
Any investor and shareholder, at least in the case of public listed companies, should understand the outcome of the revised auditor’s reports. Above all, it must understand the conclusions of the reports, so that either validate a good business model, if the audit considered the numbers as giving “ a true and fari view” or the reality or to restart thinking or review it, if the auditor concluded a “qualified” report “.
Nowadays investors become more rigorous, with diverse and complex information resources at hand. Shareholders, in turn, started to be more sophisticated in demands and more interested in details that were usually overseen.
The digital era, where new technologies increase the speed of the business environment’s reaction, and most of the time, make a difference to competitors, also required major changes in this sensitive field of audit.
The new reporting models actually represent the transition to the higher level of transparency, based on a wide range of tools, IT based, and data analytics from the financial statements of the companies. All of this, moreover, give the auditor greater flexibility in “expressing” the reports.
On the other hand, in the context of the new legislation, the final reports following an audit will be the best source of information for potential investors, making them more accessible, according to new international auditing standards so they can see beyond the figures, the business vision of shareholders and the art of its implementation by top management.
Answers to questions such as what concerns the shareholders about the customer or the competition, how they used the resources, how they created and how they accessed new resources, how they used the market opportunities that were the results will now be more “visible” in the auditor’s reports, according with the new legislation.
The adaptation of the audit on this market diven-background was inevitable and necessary, over a decade after the latest legislative and procedural update of the field (2006): International Standards of Audit (ISA) published new reporting formulas based on more complex analysis tools.
The value of the audit enters a new dimension, because it passed from a simple outline of a situation recorded in a fairly “past-tense” standard report to an in-depth report that contains all the necessary elements defining the activity. A transparent report, even more accessible, complete and accurate for investors.1