Digital reporting is fast changing the way accountants and auditors engage with their clients and with their respective regulatory authorities. Global changes are being led by the IFRS (International Financial Reporting Standards) Foundation.
Whilst the approach to assurance of digital reporting is in its infancy, both governments and auditing bodies are making progress. A key initiative is the digitisation of financial reporting via the inline XBRL standard, the international standard for digital reporting of financial, performance, risk and compliance information.
As part of the 2020-21 Budget Digital Business Plan, the federal government announced the full implementation of the Modernising Business Registers (MBR) program intended to unify the Australian Business Register (ABR) and 31 registers administered by the Australian Securities and Investments Commission (ASIC) on a digital registry system. As a first step, the Director ID requirement was introduced in 2021 with a new ABRS website at www.abrs.gov.au
Recently, the ATO presented an update on the ABRS strategic program design for external auditors and liquidators, with the intention of outlining the ways in which the flow of information between auditor, client and the ABR will improve.
The ABRS refers to 2 types of auditors, (a) Registered Company Auditors and (b) Self-Managed Super Fund Auditors (SMSF).
Key issues which auditors currently encounter with access to information concerning their relationship with clients include :
- Multiple platforms and portals for access to information
- The ATO Business portal can be difficult to navigate
- Auditors can lodge without a documented relationship to the company
- Different login details, regulators and forms across different portals
- Other auditors can lodge without relationship to company
- The need to file the same information on multiple occasions
- Requirement to print, sign and email application for portal access
At a foundation level, auditors really need to be able to view company information under S310 Corporations Act and to see which companies they are appointed to. The ABRS should also be able to see this information.
Auditors have advised they would like the following features incorporated in the new online ABRS platform:
- All data available online without the need for a paper trail
- The ability to lodge financial statements and corrections directly with ASIC or through Digital Service Providers
- Built in process for auditors to electronically verify audit reports
- A centralised process which allows lodgements to be fast and easy with fees which are easy to pay
- More transparency and communication to all parties in relation to breach notifications
- Simplified process to apply for relief in relation to fees and charges
A central database through the ABRS should streamline auditor access to information and create more visibility in relation to auditor-client interactions. The ATO’s Strategic Program design provided a roadmap for the Auditor Journey within the ABRS framework, focusing on 5 key points of contact:
A simple process for lodging financial reports and sharing information between auditor, client and the ABRS should lead to improvements in relation to:
- Integration of data between platforms
- Individual authentication for access to data
- The ability to clearly link auditor and client
- An overall dashboard view of client status
- A simplified conflict of interest check
- Full access to up-to-date company records
- Electronic signoff by auditor and client
These changes are a couple of years away and will undoubtably lead to greater confidence in the integrity of data and the ability to ‘interrogate’ data in real time. It will also lead to more transparency in relation to auditor responsibilities and engagement with clients. This can only be a positive step in an industry which is seeking greater recognition as an independent, value-added service to entities and their regulatory authorities.
In the shake-up, we’re seeing an ongoing separation of external audit from consulting activities within the accounting sector. Just in the last month, the AFR reported that EY consulting partners believe the inevitable split of audit and consulting arms will enable them to expand and take on more client work as potential conflicts of interest will be removed.
In this changing digital and regulatory environment, there’s a strong need for firms involved in audit in a secondary capacity to consider moving their audit work to specialist audit firms such as the National Audits Group. These firms are working at the cutting edge of audit and can add real value to their clients through the application of digital systems and tools to streamline the audit process.
To discuss how the National Audits Group can help your audit clients, contact our team at Ph 1300 734 707.
Steven Watson – Managing Director, National Audits Group | www.audits.com.au
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- Embracing Digital Disruption: How Auditors harness the power of technology for financial reporting - 17 July 2023