This study examines the challenges and opportunities in impelimenting of International Standard of Auditing 700 (revised 2015) and 701 (new) in Iran in terms of the recent transformations in auditor report and potential impacts of its change on various political, legal and economic environments.
We perform qualitative content analysis and in-depth interview among experienced group of 18 auditors and 15 investors.
This study has identified the defects in the present report in Iran (Form, content, presentation of the auditor report) and its roots (economic, legal, the audit profession, corporate reporting, auditing standards and expectations), as well as the challenges (auditor resistance, problems in execution of standards, increase in reporting risks, client resistance and increased probability of confusion and diversity in user perception of Key Audit Matters) Opportunities (promotion of auditor report and the audit profession, enhanced relations, improved investor decision making and management assistance) and the required strategies (training, adequate standard setting performance warrantees and method of performance) for the proper execution of the new audit report. Moreover, Key Audit Matters from the point of view of auditors and investors as well as other informational needs of investors have been extracted from the audit report.
According to the findings, the current level of the report is quite different from standard levels being applied, and effective action is required for resolving defects observed in the current auditor report, including increased supervision on the audit profession by related authorities as well as an increase in the quality of the auditor report. Moreover, findings of this research shall contribute to the body of knowledge in the field of auditing, and provide a perception- through consideration of opportunities (including upgrading the auditor report and the audit profession, improving investor decision making, etc.) and challenges encountered (such as auditor and client resistance, etc.)- by regulators including standard setting authorities in auditing, the Securities Exchange Organization can act as supervisory authorities and pave the way towards more effective achievement of objectives set for the new audit report.