Your next audit report may look different – Will it be more beneficial for your business?
By Emma Wilson, Partner
The Financial Reporting Council (FRC) has revised the standards that govern the way that audits are reported in the UK.
From 15 December 2026, a more streamlined approach will be adopted by auditors, resulting in next year’s audit reports looking notably different.
Given that auditors will be viewing your business through a fresh lens, it is worth understanding what that might mean for the utility of your audit reports.
How are audit reports changing?
If you have felt that audit reports are too verbose and littered with unnecessary information, then the FRC agrees with you.
The new standard aims to remove unnecessary reporting requirements so that there is a clearer focus on the information that investors find useful.
To achieve this aim, three UK auditing standards are being updated.
These will be:
- ISA (UK) 700 Forming an opinion and reporting on Financial Statements
- ISA (UK) 701 Communicating Key Audit Matters in the Independent Auditor’s report
- ISA (UK) 720 The Auditor’s Responsibilities Relating to Other Information
Some aspects that were previously covered in an audit may no longer need detailed reporting, so that the time and energy can be spent providing more relevant information on the judgements associated with the audits.
One of the notable effects of this is the shift away from auditors needing to provide commentary on significant qualitative aspects of the entity’s accounting practices as part of their key observations with respect to a key audit matter.
Instead, those commentaries will now be used to form the basis of a key observation only if it is relevant to the users.
Any impact of an entity’s controls on the audit will be described to provide more insight for investors so that they can better understand the control environment at the audited entity.
What will the changes to audits mean for my business?
It can be difficult to understand the intricacies of an audit report, let alone the myriad ways that they might be changing now.
In terms of how the news will impact your business, it should result in more accessible audit reports with deeper insights.
These audit reports should make it more apparent to investors the financial health of your business, signifying the extent to which you are a solid economic prospect.
Our team have encouraged businesses to make the most of their audits and these changes may help them to do exactly that.
Audits should not be seen as purely compliance checks but need to be viewed as learning opportunities for a business on the path to growth.
Knowing your financial strengths and weaknesses can ensure that your budget is accurate and your plans have a solid foundation.
Clearer audits can help with this, as can support from our expert team.
Make the most of your next audit by getting in touch with our team.