The Auditor's Report Has Changed!


In 2010 we gave up the old three-paragraph auditor’s report when the Canadian Auditing Standards were adopted.

Now, less than 10 years later, we are changing the content of the auditor’s report again.

Why did the audit report change?

The financial crisis in 2008 raised many questions about the usefulness of an audit. This prompted our standard setters to consult with financial statement users around the world. The findings indicated a strong desire for auditors to be more transparent about the work they performed and the conclusions reached. Financial statement users asked for more information to be included in the audit opinion, including a description of significant matters (called key audit matters or KAM) arising during the audit. KAM disclosures would include significant areas of risk, significant judgements made such as estimates and the audit of significant transactions. 

Does KAM apply to all entities?

Not yet.  The goal of CAS 701 - Communicating Key Audit Matters in the Independent Auditor’s Report is for KAM disclosures to be made in all audit reports. But for now, KAMs are not mandatory. For years ending on or after December 15, 2020, KAM disclosures will be required in audit reports for entities listed on the TSX.

Summary of the major changes

  • The audit report has been reorganized. The audit opinion now comes first.
  • Enhanced description of the auditor’s and management’s responsibilities.
  • Increased emphasis on the going concern assumption. Going concern uncertainties are to be disclosed in a separate paragraph.
  • More audit focus is required on financial statement disclosures.
  • The introduction of Key Audit Matters (KAM). 

The revised wording is expected to increase the auditor’s use of professional skepticism and the quality of the audit work performed.

What are the key enhancements to the auditor’s report?

  • More information to improve transparency
  • Less boiler plate wording and more information about the KAM
  • Enhanced disclosures around going concern

Key Enhancements for all entities
Audit Report Section Description of Enhancements


In recognizing its importance to users, the audit opinion paragraph has been moved to the start of the auditor’s report.

Basis for Opinion

This new section must follow the opinion section and contain:
  • a clear statement of independence
  • a clear statement of compliance with the applicable ethical requirements, including which ethical standards were followed

Going Concern

A new section of the report titled “Material Uncertainty Related to Going Concern” is required when events or conditions have been identified that may cast doubt over an entity’s ability to continue as a going concern.

Previously, an “Emphasis of Matter” section would have been used in these circumstances.


The responsibilities of those charged with governance have been clarified, particularly in relation to going concern and the oversight over the financial reporting process.

There are also more-detailed descriptions of the responsibilities of the auditor, including for going concern, and the key features of an audit.

Auditors have the option to move some of the description of their responsibilities to an appendix and refer readers to the website of a relevant authority (such as CPA Canada) that describes those responsibilities.

Other information

“Other Information” is defined as information (financial and non-financial) in an entity’s annual report other than financial statements and the auditor’s report.

The auditor is required to read this information and consider whether it is inconsistent with the financial statements or with anything learned during the audit.

The auditor’s report must include a new section titled “Other Information” that sets out which parts of the annual report the auditor obtained and read the final version.

This section is not required if other information was not available to the auditor by the date the auditor’ report was signed.

To obtain 1/2 hour free CPD for reading this article, sign in to

For more detailed information on how to prepare the new auditors report, FocusCPD offers a 1-hour course titled “Enhanced Auditor Reporting”.  You can register here: register.

For this and other continuing professional development in audits and reviews, visit

The Focus Group of Companies


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