Many Australian organisations are required to have their financial statements audited depending on their size or corporate structure. There are also many organisations that are required to be audited according to their constitution or deed or as a result of funding agreements and other contractual obligations.
The Government's introduction of new audit standards, bringing Australia into line with international audit standards, is designed to maintain public confidence in the audit process. At the same time the Government has significantly tightened the eligibility criteria to be registered as a company auditor.
The Auditing and Assurance Standards Board is a Commonwealth body responsible for issuing statutory auditing standards. They issued 35 pronouncements based on the international equivalents set by the International Auditing and Assurance Standards Board. The Corporations Act has also been amended to ensure that Australian auditing standards are enforceable in the legal and regulatory environment.
The new standards are more regulatory; many procedures that were previously regarded as guidance are now mandatory. Auditors must now collect increased levels of documentation in relation to systems, consideration of risks, information technology systems and process, independence and a number of other matters.
At present, the standards apply equally to all entities; large or small, for profit or not-for-profit. There is a review and consultation process being undertaken by the Australian Audit Standards Board exploring the possibility of applying different audit requirements appropriate to the size of the entity being audited.