November 2016 - · PDF fileDisclosure Initiative (Amendments to IAS 1), ... 6.3 Changes to...

Release NotesIFRS and ProbeNovember 2016

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Content (Click to navigate)

IFRS 2016.02.01 6Section A: Executive summary 7

1. Compliance changes 7

Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41), issued June 2014 7

Equity Method in Separate Financial Statements (Amendments to IAS 27), issued August 2014 7

Disclosure Initiative (Amendments to IAS 1), issued December 2014 7

Disclosure Initiative (Amendments to IAS 7), issued January 2016 7

2. New standards and interpretations 8

3. Revised assurance reports 8

Split of reports 8

Revised Independent Auditor’s Report 8

Key enhancements to the Independent Auditor’s Report 8

Other changes to Reports 9

4. Other disclosure enhancements 9

IFRS multi-country template 9

Present the Statement of Cash Flows according to the direct or indirect method 10

5. Technical enhancements 11

New Content and Version Management document simplifies update process 11

New expand and collapse buttons 12

Keep together feature to avoid blank spaces 12

Financial statement headers and footers renamed for easy referencing 12

Section B: Detailed changes – compliance 13

6. Impact of Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) 13

6.1. Changes to Accounting policies 13

6.2 Changes to property, plant and equipment note 13

6.3 Changes to biological assets note 14

6.4 Addition to Changes in accounting policies note 14

7. Impact of Equity Method in Separate Financial Statements (Amendments to IAS 27) 15

7.1 Changes to consolidation accounting policy 15

7.2 Changes to the joint arrangements accounting policy 17

7.3 Changes to the associate accounting policy 19

8. Impact of Disclosure Initiative (Amendments to IAS 1) 22

9. Impact of Disclosure Initiative (Amendments to IAS 7) 22

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Section C: Revised assurance reports - detail 23

10. Split of reports 23

10.1 Selection of report(s) in 01.20 Information store 23

10.2 Warning messages for selection of reports in 01.20 Information store 24

11. Revised Independent Auditor’s Report 24

11.1 Provide for two versions of the Independent Auditor’s Report 25

11.2 Opinion section 25

11.3 Basis for opinion section 26

11.4 Going Concern section 26

11.5 Other Information section 27

11.6 Key Audit Matter section 28

12 Signature area of reports 31

Option added to attach electronic headers and footers or use pre-printed letterheads 31

IFRS 2015.02.01 32Executive summary 33

1. Compliance changes 33

1.1 Statement of comprehensive income 33

1.2 Basis of preparation 35

1.3 Significant judgements and sources of estimation uncertainty 36

1.4 New standards and Interpretations 36

2. Technical enhancements 36

2.1 Balance check enhanced for unmapped accounts 36

2.2 Getting Started 36

2.3 Insert button made more prominent in the financial statements 36

2.4 Rounding 36

2.5 Signature areas enhanced 37

2.6 Page column headings now editable 37

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Probe 2016.20.01 38

Section A: Executive summary – Probe MMX 39Technical enhancements 39

Compliance Changes (major changes) 39

2.1 New and Revised Auditor Reporting Standards 39

Revised Auditor’s Report 40

Going Concern 40

Key Audit Matters 40

Revised Audit Engagement Letter 41

Auditor’s Responsibility relating to Other Information 41

2.2 Addressing Disclosures in the Audit of Financial Statements 42

2.3 Audit Procedures relating to International Financial Reporting Standards:

Probe MMX Recog & Measurement (IFRS) only 44

Content enhancement – making compliance easier 44

Section B: Detailed Probe MMX

compliance changes (major changes) 46Planning 46

10.20 Engagement Evaluation (major change - compliance) 46

10.21 Engagement letter (major change - compliance) 47

10.30 Discussions with those Charged with Governance (major change - compliance) 47

10.50 Gathering Information (major change - compliance) 48

10.60 Overall materiality assessment (major change - compliance) 50

11.20 Inherent risk assessment (major change - compliance) 50

11.40 Fraud risk assessment (major change - compliance) 51

11.50 Control activities design and implementation (major change - compliance) 52

11.60 Risk assessment at assertion level (Major change – compliance) 53

12.30 Planning Memorandum (Major change – compliance) 53

Execution 55

Work Programs (Major change - compliance) 55

80.10 Financial Statement Preparation (Major change – compliance) 55


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Finalisation 56

02.00 Partner Sign-off (major change - compliance) 56

02.55 Key Audit Matter (NEW) (Major change – compliance) 56

02.20 Going Concern Conclusion (Major change – compliance) 57

02.40 Evaluation of misstatements (Major change – compliance) 57

02.80 EQCR Checklist (Major change – compliance) 58

02.90 Report to Management and Those Charged with Governance (Major change – compliance) 58

Probe MMX Premium 5902.50 Consideration of Audit Report (major change - compliance) 59

02.70 Manager’s final checklist (major change - compliance) 59

Probe MMX Recog & Measure (IFRS) 6024.10 Group Companies (major change - compliance) 60

20.10 Property, plant and equipment (major change - compliance) 60

23.10 Intangible Assets (major change - compliance) 60

60.10 Revenue (major change – compliance). The following procedures were added: 60

Probe MMX Recog & Measure (IFRS for SME) 61

60.10 Revenue (major change – compliance). The following procedures were added: 61

Other Changes to Probe MMX, Probe MMX Premium, Probe MMX

Recog & Measurement (IFRS and IFRS for SME) (minor changes) 61

Probe Compilations 6206.10 Letter of representation 62

06.20 Compilation engagement evaluation 62

Summary of documents being updated 63

Probe MMX Audit: Key Audit Matters 65

Contact CQS 66

IFRS 2016.02.01

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Section A: Executive summary

1. Compliance changes

This template release contains various compliance changes brought about by amendments issued by the International Accounting Standards Board (IASB) which affect the presentation of the financial statements and/or disclosure in the accompanying notes. Listed below are the issued amendments that had bearing in this release. A summary of the resultant impact on the template has been provided:

Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41), issued June 2014

y This amendment changed the classification of “bearer plants” from biological assets to property, plant and equipment.

y The following areas of the financial statements were impacted: � Relevant biological assets and property, plant and equipment policies have been amended. � Bearer plants included as a category in the property, plant and equipment mapping section and the note. � Bearer plants, specifically vines and fruit trees, removed from biological assets mapping section and note. � Changes in accounting policy note updated to cater for the bearer plants amendment.

y Effective for annual periods beginning on or after 1 January 2016

[Read more]

Equity Method in Separate Financial Statements (Amendments to IAS 27), issued August 2014

y In accordance with the amendment, the accounting policies for investments in subsidiaries, associates and joint ventures have been updated to include the equity method as an appropriate method of accounting for such investments in the separate financial statements.

y Furthermore, we took this opportunity to improve the general functionality of the other policies related to consolidation, joint arrangements and associates.


[Read more]

Disclosure Initiative (Amendments to IAS 1), issued December 2014

y In the amended standard, the reference to “Summary of significant accounting policies” in the list of components of a complete set of financial statements change to “Significant accounting policies”. The template has been adjusted to cater for this change.


[Read more]

Disclosure Initiative (Amendments to IAS 7), issued January 2016

y The amendment requires entities to disclose changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. To provide the required disclosure, a new cash flow note was added reconciling the opening and closing balances of these liabilities.


[Read more]

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2. New standards and interpretations

The New standards and interpretations note has been updated with the new publications issued since our last release up to September 2016. These are:1. Clarifications to IFRS 15 Revenue from Contracts with Customers (Amendments to IFRS 15 Revenue from Contracts

with Customers), issued April 2016.2. Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2 Share-based

payment), issued June 2016.3. Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4 Insurance

Contracts), issued September 2016.

3. Revised assurance reports

Split of reports

y The Independent Auditor’s, Independent Reviewer’s, Practitioner’s Compilation and Accounting Officer Reports have been split to allow the user to present more than one report in the financial statements.

y The following areas of the financial statements were impacted: � Information store � Auditor’s, Independent Reviewer’s, Practitioner’s Compilation, Accounting Officer’s and Accounting officer’s

and compilation Reports.

[Read more]

Revised Independent Auditor’s Report

The Independent Auditor’s Report was revised to meet the requirements of the new and revised Auditor Reporting standards effective for audits of financial statements for periods ending on or after 15 December 2016.

Key enhancements to the Independent Auditor’s Report

Mandatory for audits of financial statements of listed entities, voluntary application for entities other than listed entities: y A new section in the Independent Auditor’s Report to communicate key audit matters (KAM's) (new ISA 701)

� KAM's are those matters that, in the auditor’s judgement, were of most significance in the audit of the current-period financial statements.

� The description of KAM's is always required to include: ○ Why the matter was considered to be one of most significance in the audit and therefore determined

to be a KAM; ○ How the matter was addressed in the audit; and ○ Reference to the related disclosure(s).

In South Africa, it is also mandatory for audits of Collective Investment Schemes and Medical Schemes.

For all audits: y The Opinion section is required to be presented first, followed by the Basis for Opinion section, unless law or

regulation prescribed otherwise (revised ISA 700). y Enhanced auditor reporting on going concern (GC), including

� Description of the respective responsibilities of management and the auditor for GC; and

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� A separate section when a material uncertainty exists, and is adequately disclosed in the financial statements, under the heading ‘Material Uncertainty Related to Going Concern’’ (ISA 570).

y Affirmative statement about the auditor’s independence and fulfillment of relevant ethical responsibilities, with disclosure for the jurisdiction or origin of those requirements of reference to the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (revised ISA 700).

y Other Information or other appropriate heading to provide transparency on the auditor’s work relating to other information (revised ISA 720).

[Read more]

Other changes to Reports

Signature areas in Reports: y Provide for the option to sign as engagement partner or as firm. y Provide for the option to show date and place of signature either below or next to the signature. y Provide for option to record business address and place of signature.

[Read more]

4. Other disclosure enhancements

IFRS multi-country template

This update introduces a brand new IFRS multi-country template supporting localised content for South Africa, Nigeria and Kenya. Other countries are supported with generic IFRS content as legislated internationally.The following localised content is in the information store and throughout the financial statements: y Country-specific disclosure y Applicable legislation y Currency, includes an editable currency symbol field to allow for user customisation of the currency symbol

across the financial statements y Tax information y Relevant designations

Users will be prompted to select a country when running the template installation.

Alternatively, users can change the country through the Country of incorporation/registration field in the information store.

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As this is a brand new template, existing users in Africa who are currently on the 2014.03.03 version of the IFRS Africa template will be required to follow the ‘New File from Client Data’ process. This update method will retain the company details, consolidation structure, accounts, journal entries and other accounting data. Any customisation on the financial statements will be lost and configuration will be required on the latest template. Please refer to the mailer accompanying this release for further details.

Present the Statement of Cash Flows according to the direct or indirect method

IAS 7 Statement of Cash Flows gives preparers of financial statements the option of reporting cash flows from operating activities using either the direct method or the indirect method. This template update now includes this feature which can be activated through the settings and format function.

When selecting the indirect method, the Cash generated from/used in operations note is not available to avoid duplication of disclosure.

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5. Technical enhancements

New Content and Version Management document simplifies update process

We’ve changed the way of updating files by giving you more control over financial statement content changes and updates. An update notification still launches when opening a file after installing the latest template. This update, however, only applies the latest technology enhancements. To ensure that users enjoy the latest technological enhancements to the software, running the technology update is compulsory. Thereafter, users are in control of content updates, using the Content and Version Management document.

The new Content and Version Management document empowers users to select which areas of the financial statements to update through the use of filtered views and content status tags.

Content status type DescriptionOn Content in use in the financial statements; most-likely to show in a printed set.Outdated Existing content is outdated; new content available by updating to the latest template. Required Sections to be updated consisting of compliance content or having a dependency on

other parts of the financial statements.Restricted Existing sections in the financial statements where users have selected to “restrict

content updates”.User-created Sections created by the user i.e. customised (new) note or accounting policy.Alternate Alternate content layout available in the template, i.e. Property, plant and equipment

and Related Parties notes.Just updated Following an update, indicates the specific sections updated, allowing users to review

the changes made to the content.

By default, the “On and outdated” filter is selected. This is the minimal recommended list of content to update to ensure that the file is updated with the latest available compliance features in the file. However, if extensive changes had been made to specific section these can be deselected from the update. Users are however encouraged not to deselect these options.

Click on this link for a video guiding you through the new update process.

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New expand and collapse buttons

The user interface has been updated with a modernised expand and collapse button. Functioning in the same manner as the old plus/minus button ( / ), clicking on expand button ( ) unveils hidden content within that section. Similarly, clicking on the collapse button ( ) will hide the content. The right click on/off function is still available and performs the same function.

Keep together feature to avoid blank spaces

A keep together function has been added to the notes section of the financial statements, as part of the right click menu. This function allows users to control the way content prints when flowing over more than one page and will resolve many of the support queries related to ‘blank spaces’ in the financial statements.

Click on this link for a video guiding you through the use of the keep together feature.

Financial statement headers and footers renamed for easy referencing

The headers and footers in their respective libraries have been renamed from their previous generic descriptions (Header 1, 2, etc.) to be more specific; referencing the pages and/or sections to which they relate. This enables users to identify headers and footers at a glance and allows for easy referencing.

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Section B: Detailed changes – compliance

6. Impact of Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41)

An amendment to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture changed the classification of “bearer plants” from biological assets to property, plant and equipment.

6.1. Changes to Accounting policies

What’s new? Why?Bearer plants have been included in the property, plant and equipment accounting policy.All references to vines and fruit trees (examples of biological assets) have been removed from the biological assets accounting policy.

These changes were made to maintain alignment between the template and the standard.

Extract 1 – property plant and equipment accounting policy

Extract 2 – biological assets accounting policy

6.2 Changes to property, plant and equipment note

What’s new? Why?A line item for bearer plants has been added to the property, plant and equipment note. Extract 1 only illustrates the additional line item in the summary, however all impacted areas of the note have been updated. Refer to Extract 1.

Additional mapping has been added to property, plant and equipment for bearer plants. Refer to Extract 2.

Similar mapping changes were made for depreciation of property, plant and equipment in the income statement section.


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Extract 1 - PPE note summary

Extract 2 - PPE bearer plants mapping

6.3 Changes to biological assets note

What’s new? Why?Vines and fruit trees (examples of bearer plants) have been removed from the biological assets note. Extract 1 and 2 only illustrates the impact on the summary of biological assets, however all impacted areas of the note have been updated. Refer to Extract 1 and 2.

Mapping for vines and fruit trees has been removed from the biological assets section. Refer to Extract 3 and 4.

Similar mapping changes were made for depreciation in the income statement section.

Note that amounts previously mapped to vines and fruit trees in biological assets will automatically be mapped to the bearer plant class under PPE within their respective categories.


6.4 Addition to Changes in accounting policies note

In accordance with IAS 8, a section was added to the “changes in accounting policies” note to explain the change in accounting policy as a result of the change in classification of bearer plants.

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Extract 1 - new Agriculture: Bearer Plants amendment added

7. Impact of Equity Method in Separate Financial Statements (Amendments to IAS 27)

7.1 Changes to consolidation accounting policy

7.1.1 General

What’s new? Why?User guidance added to the consolidation accounting policy. The guidance was added as a reminder to users

that the section only applies when consolidated financial statements are prepared.

Minor content changes were made to the consolidation and business combination accounting policy sub-sections. These changes have not been illustrated. The overall context or meaning of the policies have not been altered as a result of these changes.

Content improvements were made to enhance the overall quality and relevance of the template.

Extract 1 – user guidance

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7.1.2 Investment in subsidiaries in the separate financial statements – election

The amendment allows the election of the equity method to account for investments in subsidiaries in the separate financial statements of the parent.

What’s new? Why?In the previous template, only a stand-alone policy option was catered for to disclose investments in subsidiaries in the separate financial statements. The template gives the user the option to disclose this accounting policy in two distinct places:

1. As a subsection of the consolidation accounting policy (see extract 1) or

2. As a stand-alone accounting policy, in the same place as in previous templates (see extract 2)

This change gives users greater flexibility by providing an alternative for the disclosure of investments in subsidiaries in the separate financial statements when preparing group statements, as part of the main consolidation accounting policy.

Users are able to navigate between the options through the use of radio buttons and a “jump to” feature.

Redundant content within the Investments in subsidiaries in the separate financial statements section was deleted. Refer to the red box in extract 3.


The accounting policy selection drop down for investments in subsidiaries in the separate financial statements has been updated to include the equity method.

The descriptions relating to the other methods have also been amended


Extract 1 – new subsection in consolidations accounting policy

Extract 2 – updated separate Investment in subsidiaries accounting policy

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Extract 3 – text deleted from the separate Investment in subsidiaries accounting policy in the previous template

7.2 Changes to the joint arrangements accounting policy

7.2.1 General

What’s new? Why?The joint arrangements accounting policy has been separated from the policy relating to consolidations, allowing users to disclose it independently of the consolidation accounting policy.

The accounting policies were separated to allow for the disclosure of joint arrangements when there are no investments in subsidiaries and consolidation is not applicable.

User guidance added to the accounting policy for joint arrangements.

The guidance was added as a reminder to users that the section only applies when investments in joint ventures are equity accounted.

Consistent with consolidations, a subsection has been added for investments in joint ventures in the separate financial statements. This is discussed later.

Additional content was added to the joint ventures accounting policy. Refer to the paragraphs framed in blue in extract 2.


Extract 1 – separate Joint arrangements accounting policy with user guidance

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Extract 2 – wording changes to joint ventures accounting policy

7.2.2 Investment in joint ventures in the separate financial statements – election

The amendment allows the election of the equity method to account for investments in joint ventures in the separate financial statements of the parent.

What’s new? Why?In the previous template, only a stand-alone policy option was catered for to disclose investments in joint ventures in the separate financial statements. The template gives the user the option to disclose this accounting policy in two distinct places:

1. As a sub section of the ‘statutory’ joint arrangements accounting policy (see extract 1) or


This change gives users greater flexibility by providing an alternative for the disclosure of investments in joint ventures in the separate financial statements, as a separate policy or part of the main Joint arrangements accounting policy.


The accounting policy selection drop down for investments in joint ventures in the separate financial statements has been updated to include the equity method.

The descriptions relating to the other methods have also been amended.


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Extract 1 – new subsection in joint arrangements accounting policy

Extract 2 – updated separate accounting policy

7.3 Changes to the associate accounting policy

7.3.1 General

What’s new? Why?The associates accounting policy has been separated from the policy relating to consolidations, allowing users to disclose it independently of the consolidation accounting policy.

The accounting policies were separated to allow for the separate disclosure of associates when there are no investments in subsidiaries and consolidation is not applicable.

User guidance added to the accounting policy for associates.

The guidance was added as a reminder to users that the section only applies when investments in associates are equity accounted.

Consistent with consolidations, a subsection has been added for investments in associates in the separate financial statements.

Additional content was added to the associates accounting policy. Refer to the paragraphs framed in blue in extract 1.


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Extract 1 – separated Investments in associates accounting policy with user guidance and wording changes

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7.3.2 Investment in associates in the separate financial statements - election

The amendment allows the election of the equity method to account for investments in associates in the separate financial statements of the parent.

What’s new? Why?In the previous template, only a stand-alone policy option was catered for to disclose investments in associates in the separate financial statements. The template gives the user the option to disclose this accounting policy in two distinct places:

1. As a sub section of the ‘statutory’ associates accounting policy (see extract 1) or


This change gives users greater flexibility by providing an alternative for the disclosure of investments in associates in the separate financial statements, as a separate policy or part of the main Associates accounting policy.


The accounting policy selection drop down for investments in associates in the separate financial statements has been updated to include the equity method.

The descriptions relating to the other methods have also been amended.


Extract 1 – new subsection in Investment in associates accounting policy

Extract 2 – updated separate Investments in Associates accounting policy

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8. Impact of Disclosure Initiative (Amendments to IAS 1)

The December 2014 publication entitled “Disclosure Initiative – Amendments to IAS 1” replaced the “summary of significant accounting policies” with “significant accounting policies” in the list of the components of a complete set of financial statements.

What’s new? Why?Change of the main heading from “Summary of significant accounting policies” to “Significant accounting policies”.

This change was made to maintain alignment between the template and the standard.

Extract 1 – change in main heading of accounting policies

Previous Current

9. Impact of Disclosure Initiative (Amendments to IAS 7)

The amendment introduced as part of Disclosure Initiative (Amendments to IAS 7) was in response to users’ need to improve understanding and analysis of cash flows, and highlighted the importance of reconciliations of net debt in order to: y Reconcile items on the statement of financial position and the statement of cash flows y improve investor confidence in forecasting future cash flows y Provide information about an entity’s sources of finance and how those sources are used over time y Understand the entity’s exposure to risk associated with financing.

What’s new? Why?A new cash flow note entitled “Changes in liabilities arising from financing activities” has been added. The note, consisting of reconciliation tables for each year, has automated opening and closing balances with reconciling cash and non-cash categories as depicted in Extract 1 below.

This change was made to maintain alignment between the template and the standard.

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Extract 1 – new Cash flow note

Section C: Revised assurance reports - detail

10. Split of reports

10.1 Selection of report(s) in 01.20 Information store

What’s new? Why?Provision is made under “Engagement variables” for the selection of more than one report to be presented in the financial statements.

Users wanted the ability to insert more than one report in the financial statements, for example an “Independent auditor’s report” and a “Practitioner’s compilation report” when the financial statements are prepared by one person and the audit is performed by another.

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What’s new? Why?Based on the selection of the report, the type of engagement with the highest level of assurance is populated. For example, if both Independent Auditor’s and Practitioner’s compilation reports are selected, audit will be populated as the Type of engagement.

The Type of engagement will determine information populated in other areas of the financial statements, for example the “Control page”, “Index Page”, the “Director’s Responsibilities and Approval” and “Director’s Report”.

10.2 Warning messages for selection of reports in 01.20 Information store

What’s new? Why?Warning messages have been built in depending on the selection of the reports, indicated by the icon which highlights when a report is selected that appears to be an illogical selection based on the Public Interest Score, entity type and/or combination of reports.

To assist the user in selecting the correct report(s) to present in the financial statements.

For example: If the Public Interest Score (01.30) indicates that an audit must be performed, a warning message will appear when an Independent reviewer’s report is selected (see below).

11. Revised Independent Auditor’s Report

The new and revised Auditor Reporting standards and related confirming amendments respond to the call by stakeholders that the Independent auditor’s report should provide more relevant information to users based on the audit that was performed. The IAASB has indicated that they believe that the changes to auditor reporting will have the benefit of: y Enhanced communication between the auditor and investors as well as between auditors and those charged

with governance; y Increased attention by management and those charged with governance (e.g. the audit committee) to the

disclosure in the financial statements to which reference is made in the Independent auditor’s report; and y Renewed focus of the auditor on matters to be reported, that could indirectly result in an increase in

professional skepticism.”

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11.1 Provide for two versions of the Independent Auditor’s Report

What’s new? Why?Use the “Version of Report” button to select the applicable version of the report, namely Independent Auditor’s Report for periods ending y Between 15 December 2009 and 15 December 2016 y On or after 15 December 2016 (hereafter referred to

as “Revised Auditor’s Report”)

To provide the user with the required format and content of the Independent Auditor’s Report based on the year end of the auditee or the decision to early adopt.

11.2 Opinion section

What’s new? Why?The Opinion section is presented first, followed by the Basis for Opinion section.

Compliance with the revised ISA 700.

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11.3 Basis for opinion section

What’s new? Why?An affirmative statement about the auditor’s independence and fulfillment of relevant ethical responsibilities is included in the “Basis for opinion” section.


What’s new? Why?The jurisdiction or origin of the independence and ethical requirements will update based on the selection of country in the “Information Store”.

The user has the ability to edit the information in the relevant fields.

To enable compliance with the revised ISA 700.

For example, if South Africa is selected as depicted in the image above, reference will be made to the Independent Regulatory Board for Auditors’ Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable in South Africa. If Kenya is selected for example, reference will be made to the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B) (IESBA Code) and other independence requirements applicable in Kenya (refer below):

11.4 Going Concern section

What’s new? Why?Included a separate section ‘Material Uncertainty Related to Going Concern’ to be used when a material uncertainty exists, and adequate disclosure about the material uncertainty was made in the financial statements. (The Emphasis of Matter paragraph was used to date.)


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What’s new? Why?

A warning message shows next to the heading, when the note relating to “Going Concern” was switched on in the financial statements, but the “Material uncertainty related to going concern” section in the Independent Auditor’s Report is not switched on.

A warning message shows next to the heading and the note relating to “Going Concern” when the “Material uncertainty related to going concern” section in the Auditor’s Report is switched on, but the note in the financial statement is not switched on.

To assist the user with compliance.

11.5 Other Information section

What’s new? Why?The Other Information section was updated to include: y A statement that management is responsible for other information. y Identification of the other information. y A statement that the auditor’s opinion does not cover the other information and,

accordingly that the auditor does not express and audit opinion or any form of assurance conclusion thereon.

y A description of the auditor’s responsibilities relating to reading, considering and reporting on other information.

y Either a statement that: � The auditor has nothing to report; or � Describes the uncorrected material misstatement of the other information.

Compliance with revised ISA 720.

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11.6 Key Audit Matter section

What’s new? Why?Included a section in the Independent auditor’s report to communicate key audit matters (KAM's).

Guidance is provided to inform the user in which instances reporting of KAM's is mandatory.

Provision is made for the instance where KAM's should be presented, for example listed entities, but the auditor did not identify any KAM's to report.

KAM's should be presented for all audits of complete sets of general purpose financial statements of listed entities and when the auditor is required by law or regulation to communicate these matters.

What’s new? Why?When the Type of Company in the Information Store is selected as a Listed Company, the KAM's section will appear in blue with the guidance text to prompt the user to switch on the KAM's paragraph.

KAM's should be presented for all audits of complete sets of general purpose financial statements of listed entities.

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What’s new? Why?Provision is made for 3 different ways to present KAM's:

� 2 Column table � 3 Column table � Text format

The user can edit the description of the heading

We reviewed the public available examples of Independent Auditor’s Reports with KAM's sections included. We noted that different formats were used to present KAM's. We wanted to give our users options to present KAM's.

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What’s new? Why?Provision is made for 3 KAM's. The user can add more KAM's by following the steps below.

Enable the user to report additional KAM's.

Step 1: Use the Insert function

Step 2: Select Table rows and select to add the Heading Row above or below

Step 3: Select Table rows and select to add an Input row above or below

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12 Signature area of reports

What’s new? Why?Provide for the following options: y Sign as engagement partner or as firm. y Show or hide line above signature. y Provide line to record date of report or date pulls through

from Information Store. y Present place of signature or business address as recorded in

the Information Store.

Feature requested by clients.

Option added to attach electronic headers and footers or use pre-printed letterheads

What’s new? Why? y The header/footers tab in the Settings and Format has been

updated with the following, for all reports: y Option to use electronic header/footer, and the ability to add

separate headers and footer logos/images y Option to use a pre-printed letterheads

Feature requested by users.

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IFRS 2015.02.01

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Executive summary This summary details the changes encapsulated in the 2015.02.01 version of the template, released in June 2016. If you are on version 2014.02.06 or earlier, all the changes listed in the release notes to version 2016.02.01 as well as those listed below would be applicable. Click on this link to be directed to the web for the complete release notes that accompanied this release.

1. Compliance changes

1.1 Statement of comprehensive income

Significant changes were made to the statement of comprehensive income and its related notes, the detailed income statement and the income statement for agricultural activities. These changes were made to align the template with common practice and/or to amend any errors or inconsistencies in the template. Other changes were made to align the various statements with each other, for example, to align the statement of comprehensive income and the detailed income statement on a line by line basis.

Revenue

y Discount allowed has been included under revenue. y Rental income has been separated into the following categories:

� Rental income on investment property. � Levies and other income on investment property. � Other rental income.

[Read more]

Cost of sales

The cost of sales note has been repackaged and automated, and now includes the following accounts: y Discount received. y Write downs of inventory to net realisable value. y Reversals of write downs of inventory to net realisable value. y Inventories lost or written off.

[Read more]

Other operating income

y Name changed from “other income” to “other operating income”. y Rental income has been separated into the following categories:

� Rental income on investment property. � Other rental income.

y Recoveries has been separated into: � Bad debts recovered. � Compensation from insurance claims. � Other recoveries.

y Movements out of other operating income: � Gains on disposal of assets - to other operating gains (losses) or other non-operating gains (losses), as

appropriate. � Gains on foreign exchange - to other operating gains (losses). � Discount received - to cost of sales.

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http://www.cqs.co.za/wp-content/uploads/2016/05/AS-IFRS-Release-notes-2016.pdf


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y An additional line item, “Gain on a bargain purchase in a business combination” (“negative goodwill”), has been added to the note.

[Read more]

Other operating gains (losses)

This is a new note and incorporates items which could either be gains or losses as well as items which are not expected to occur routinely. The note incorporates: y Gains (losses) on disposals, scrappings and settlements of assets and liabilities. y Reversals of impairment losses. y Foreign exchange gains (losses). y Restructuring costs, previously on the face of the statement of comprehensive income. y Fair value gains (losses), previously on the face of the statement of comprehensive income.

[Read more]

Other operating expenses

y Name changed from “operating expenses” to “other operating expenses”. y Movements out of the other operating expenses note:

� Reversals of impairments of assets - to “other operating gains (losses)” or “other non-operating gains (losses)”, as appropriate. This excludes reversals of provisions for impairments of trade and other receivables which remain part of other operating expenses as an offset against provisions for impairment of trade and other receivables.

� Write downs of inventory to net realisable value - to cost of sales. � Reversals of write downs of inventory to net realisable value - to cost of sales. � Discount received - to cost of sales. � Losses on disposals of assets - to other operating gains (losses) or other non-operating gains (losses), as � appropriate. � Losses on foreign exchange - to other operating gains (losses)

y The “other operating expenses” line item in the statement of comprehensive income is automatically reduced by the amounts input into the newly created line items for “expenses by function” feature (see point 1.6).

[Read more]

Presentation of expenses by nature or by function

The statement of comprehensive income now includes an option to present expenses either in terms of their function (default, as illustrated in the extracts shown above) or by their nature. y Additional line items were added to the face of the statement of comprehensive income for the presentation of

the various classes of expenses by function. These line items contain input cells, which reduce the value of the “other operating expenses” line, the default line item for operating expenses.

y For expenses presented by function, the following categories are available: � Cost of sales. � Selling and distribution expenses. � Marketing expenses. � General and administrative expenses. � Research and development. � Maintenance expenses. � Other operating expenses (default category).

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y The corresponding disclosure of “expenses by nature” has been automated and is incorporated into the operating profit (loss) note.

y For expenses presented by nature, the following classes have been created: � Changes in inventories of finished goods and work in progress. � Raw materials and consumables used. � Employee costs. � Operating lease charges. � Depreciation, amortisation and impairment. � Other expenses.

[Read more]

Investment income

y Name changed from “investment revenue” to “investment income”. y Total investment income has remained unchanged, but several changes were made to the classifications of

investment income within the note.

[Read more]

Finance costs

y Finance costs has moved higher up in the statement of comprehensive income, following directly after investment income.

y Total finance costs remained unchanged, but several changes were made to the classifications of finance costs within the note.

[Read more]

Other non-operating gains (losses)

y This is a new note designed for entities who consider certain items to be non-operating in nature. y This note incorporates the following, when considered to be non-operating:

� Certain gains (losses) on disposals, scrappings and settlements of assets and liabilities. � Certain impairment losses and reversals of impairment losses. � Certain fair value gains (losses), previously shown on the face of the statement of comprehensive income.

[Read more]

Line items removed

y The following line items have been removed from the face of the statement of comprehensive income and incorporated into other line items on the statement of comprehensive income: � Restructuring costs. � Fair value adjustments. � Gains (losses) on biological assets and agricultural produce. � Gains (losses) on non-current assets held for sale or disposal groups.

1.2 Basis of preparation

The basis of preparation section of the accounting policies note has been enhanced to include more corporate information. The compliance statement has also been expanded on.

[Read more]

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1.3 Significant judgements and sources of estimation uncertainty

IFRS requires that significant judgements and sources of estimation uncertainty are disclosed separately. The note now separates these into two distinct components with new example scenarios of each.

[Read more]

1.4 New standards and Interpretations

The note has been updated for these new standards and interpretations issued by the IASB, up to 31 March 2016: y IFRS 16 Leases, issued in January 2016. y Amendments to IAS 12: Recognition of deferred tax assets for unrealised losses, issued in January 2016. y Amendments to IAS 7: Disclosure initiative, issued in January 2016. y The change in the effective date of Amendments to IFRS 10 and IAS 28. y The change in the effective date of IFRS 15 Revenue.

2. Technical enhancements

2.1 Balance check enhanced for unmapped accounts

A new line item, “Unmapped accounts”, has been added to the balance check. After running an update, it is possible that certain accounts have been unmapped. In the event that there are unmapped accounts, the following information is provided: y A bubble appears on the balance check icon, informing users that there are accounts which are unmapped. y The “Unmapped accounts” line item has been added to the Balance Check in the CaseView toolbar as well as on

the control page and only populates if there are unmapped accounts, and those accounts have balances.

2.2 Getting Started

The option is now available to turn off the Getting Started for a specific user. y Although this toolbar can be turned off per client file, we recognise that as users become more advanced there

is a need to turn it off permanently. y This is possible by selecting the “Don’t show on startup” option at the bottom of the Getting Started. y The Getting Started is still available in the CaseWare template toolbar.

2.3 Insert button made more prominent in the financial statements

The insert button, located in the Content Management ribbon, has been added back to the CaseView toolbar.

2.4 Rounding

The rounding calculation has been updated, thus resolving the rounding issues identified between statements, notes and reconciliation table values.

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2.5 Signature areas enhanced

The signature areas have been enhanced to work independently of each other such that the number and selection of directors can be different in the different areas. Signature areas in the following reports have been affected: y Directors’ Responsibility and Approval. y Directors’ Report. y Index.

2.6 Page column headings now editable

A new category “Column headings” has been added to the Information store. Compilers of financial statements can now change the column headings for all periods presented to either “Unaudited”, “Restated” or “Other”. y When “Restated” is selected, an asterisk appears next to the column heading and as a footnote in the page

footer with reference to either the “Change in accounting policy” or “Prior period error” note. y The new column headings can also be applied to the notes of the financial statements.

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Probe 2016.20.01

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Section A: Executive summary – Probe MMX

Technical enhancements The Probe MMX 2016 template provides enhanced update functionality that will enable the firm and/or user in the future to update their firm template or engagement file with only the relevant changes to work programs, whereas up until now work programs were replaced.

For this release we distinguish between major and minor changes. y Major changes are compliance changes and improvements to make compliance easier that will automatically

be updated. The revised or new procedures or documents will be added to the firm template and/or existing engagement file.

y Minor changes are optional changes which include improvements in documents or correction of bugs. The firm and/or user will have an option to insert the document. In this instance client data and customization in the document will be lost.

Refer to Annexure A for a summary of documents that are being updated.

Compliance Changes (major changes) The template release contains various compliance changes brought about by:

y The new and revised auditor reporting ISAs and related conforming amendments (insert link to 2.1), y The clarification of the auditor’s work in relation to disclosures (insert link to 2.2), y Revised International Financial Reporting Standards (insert link to 2.3), and y Content enhancement – making compliance easier (insert link to 2.4).

A summary of the resultant impact on the template has been provided below.

2.1 New and Revised Auditor Reporting Standards

The template release contains various compliance changes brought about by the new and revised auditor reporting ISAs (ISA 700, ISA 701, ISA 705, ISA 706, ISA 570, ISA 260) as well as the conforming amendments to other ISAs as a result of the new and revised auditor reporting ISAs (ISA 210, 220, 230, 510, 540, 580, 600, 710, 720). The new and revised Auditor Reporting standards are effective for audits of financial statements for periods ending on or after 15 December 2016.

General y The relevant documents will be updated (refer Annexure A) to incorporate procedures relating to the new and

revised auditor reporting standards based on: � The year-end of the auditee

Year-end before 15 December 2016 Existing proceduresYear-end on or after 15 December 2016 New and revised procedures

� A decision to early adopt the revised standards (including the revised Auditor's Report). y The following area of Probe MMX was impacted:

� 10.20 Engagement Evaluation Read more

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Revised Auditor’s Report

y Summary of key changes to the Auditor’s Report mandatory for all audits y The Opinion section required to be presented first, followed by the Basis for Opinion section, unless law or

regulation prescribes otherwise (ISA 700). � Enhanced auditor reporting on going concern (GC), including

○Description of the respective responsibilities of management and the auditor for GC; ○ A separate section when a material uncertainty exists, and is adequately disclosed in the financial statements, under the heading 'Material Uncertainty Related to Going Concern' (ISA 570).

� Affirmative statement about the auditor’s independence and fulfilment of relevant ethical responsibilities, with disclosure for the jurisdiction of the origin of those requirements of reference to the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (ISA 700).

� Enhanced description of the responsibilities of the auditor and key features of an audit (ISA 700). � Other Information or other appropriate heading to provide transparency on the auditor’s work relating to

other information (revised ISA 720).

y Key change to the Auditor’s Report mandatory for listed entities (and the audits of Collective Investment Schemes and Medical Schemes in South Africa) � A new section in the auditor’s report to communicate key audit matters (KAM) (ISA 701). The description of

KAM is always required to include: ○ Why the matter was considered to be one of most significance in the audit and therefore determined to be a KAM; ○How the matter was addressed in the audit; and ○Reference to the related disclosure(s).

y The following areas of Probe Premium was impacted: � 02.50 Consideration of Audit Report Read more

Going Concern

y Enhanced auditor reporting on going concern (GC), including: � A separate section when a material uncertainty exists, and is adequately disclosed, under the heading

‘Material Uncertainty Related to Going Concern’’; and � Requirement to challenge adequacy of disclosure for ‘close calls’ in view of the applicable financial reporting

framework when events or conditions are identified that may cast significant doubt of an entity’s ability to continue as a GC.

y The following area of Probe MMX was impacted: � 02.20 Going Concern Conclusion

Read more

y The following area of Probe Premium was impacted: � 02.50 Consideration of Audit Report Read more

Key Audit Matters

y KAM are those matters that, in the auditor’s judgement, were of most significance in the audit of the current-period financial statements. Mandatory for audits of financial statements of listed entities, voluntary application

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for entities other than listed entities. In South Africa, it is also mandatory for audits of Collective Investment Schemes and Medical Schemes.

y The auditor’s responsibility to communicate key audit matters in the auditor’s report in accordance with ISA 701 was included in the Engagement letter (ISA 210).

y The conclusions reached by the engagement team in formulating the auditor’s report to include: � The key audit matters to be included in the auditor’s report; � The key audit matters that will not be communicated in the auditor’s report; and � If applicable, depending on the facts and circumstances of the entity and the audit, that there are no key

audit matters to communicate in the auditor’s report. y The following areas of Probe MMX were impacted (refer to the flow diagram in Annexure XX):

� 10.20 Engagement Evaluation Read more � 10.21 Engagement letter Read more � 10.50 Gathering information Read more � All work programs – conclusion paragraph Read more � 02.00 Partner sign-off Read more � 02.55 Key Audit Matters (New) Read more � 02.80 EQCR Read more � 02.90 Report to Management and Those Charged with Governance Read more

y The following areas of Probe Premium were impacted: � 02.50 Consideration of Audit Report Read more � 02.70 Manager’s final checklist Read more

Revised Audit Engagement Letter

y The example of an Audit Engagement Letter in ISA 210 has been revised. y The following areas of Probe MMX were impacted:

� 10.21 Engagement letter Read more

Auditor’s Responsibility relating to Other Information

y The scope of Other Information was broadened and clarified by relating it to the concept of an ‘annual report’. y The auditor’s work effort was enhanced and explained, inter alia to include:

� Obtain in a timely manner the final version of the other information. � Read the other information and consider whether a material inconsistency exists between the other

information and ○ The financial statements, and ○The auditor’s knowledge obtained in the audit. ○ The auditor is required to compare selected amounts or other items in the other information with such amounts or other items in the financial statements.

� Remain alert for indications that the other information appears to be materially misstated in comparison to the financial statements and the auditor’s knowledge.

� Introducing documentation requirements in terms of which the auditor includes in the audit documentation: ○The procedures performed regarding the “Other Information”, ○The final version of the other information on which the auditor has performed the work.

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y The following areas of Probe MMX were impacted: � 80.10 Financial statement preparation work program Read more

y The following areas of Probe Premium were impacted: � 02.50 Consideration of Audit Report Read more

2.2 Addressing Disclosures in the Audit of Financial Statements

The template has been updated in response to the revised ISAs and application material to the ISAs (ISA 200, ISA 210, ISA 260 (Revised), ISA 300, ISA 315 (Revised), ISA 320, ISA 330, ISA 450, ISA 00 (Revised)), published by the IAASB in July 2015 “Addressing Disclosures in the Audit of the Financial Statements”.

The aforementioned revised standards are effective for audits of financial statements for periods ending on or after 15 December 2016. The template will be updated with the revised procedures, irrespective of year end of the auditee, as the majority of the amendments to the standards relates to clarifying the auditor’s work in relation to disclosures,

The additional guidance in the application material to the above mentioned ISA, clarify and/or emphasize the work the auditor is required to perform in relation to disclosures, inter alia: a. Encourage management to provide information for disclosures earlier in the audit process. b. Consider whether there is intentional misstatement of disclosures that may constitute fraud. c. Communicate with those charged with governance regarding financial statements and disclosures earlier in

the audit process.d. Consider disclosures earlier in the audit process.e. Consider the information in disclosures obtained from outside of the general and subsidiary ledgers in the

planning process.f. Consider qualitative disclosures when materiality is determined.g. Reconcile the information in the financial statements to audit evidence.h. Consider the adequacy of the presentation and disclosure in the financial statements.i. Accumulate and evaluate the misstatements in disclosures.j. Evaluate the financial statements.

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y The following areas of Probe MMX were impacted:

Document reference

Document description

Auditor’s responsibility clarified and/or emphasized

10.21 Engagement letter Encourage management to provide information for disclosures earlier in the audit process.

10.30 Discussions with those charged with governance

Communicate with those charged with governance regarding financial statements and disclosures earlier in the audit process.

Consider disclosures earlier in the audit process.10.60 Overall materiality assessment Consider qualitative disclosures when materiality is

determined.11.20 Inherent risk assessment Consider disclosures earlier in the audit process.11.40 Fraud risk assessment Consider whether there is intentional misstatement of

disclosures that may constitute fraud. 11.50 Control activities design and

implementationConsider disclosures earlier in the audit process.

Consider the information in disclosures obtained from outside of the general and subsidiary ledgers in the planning process.

12.30 Planning Memorandum/ Audit Strategy Consider disclosures earlier in the audit process.12.30 Planning Memorandum/ Planning

meeting notesConsider whether there is intentional misstatement of disclosures that may constitute fraud.

80.10 Financial statement Preparation Reconcile the information in the financial statements to audit evidence.

Evaluate the financial statements.02.40 Evaluation of misstatement Accumulate and evaluate the misstatements in

disclosures.

The description of the assertions were revised to integrate audit procedures for disclosures with account balances and transactions.

Combined assertion:

Classes of Transactions and related disclosures

Account Balances and related disclosures

Description

Completeness C Completeness Completeness Everything that should have been recorded have been recorded, and all the related disclosures that should have been included in the financial statements have been included.

Existence and Occurrence

EO Occurrence Existence Everything that is recorded or disclosed in the financial statements exist or has occurred and pertains to the entity.

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Rights and Obligations

RO N/A Rights and obligations

All liabilities, assets and rights to assets (in the form of a hold or control) are the property or obligation of the entity.

Accuracy, valuation and allocation

VA Accuracy Cut-off Classification Presentation

Accuracy, valuation and allocation Classification Presentation

Amounts, assets, liabilities and equity interests have been recorded at appropriate amounts and any resulting valuation or allocation adjustments have been appropriately recorded, and related disclosures have been appropriately measured and described (are relevant and understandable). Furthermore everything has been allocated to the proper accounts and appropriately aggregated or disaggregated and recorded in the correct accounting period

2.3 Audit Procedures relating to International Financial Reporting Standards: Probe MMX Recog & Measurement (IFRS) only

y 24.10 Group Companies. The procedure relating to accounting for investments in subsidiaries, associates and joint ventures has been updated to include the equity method as an appropriate method of accounting for such investments in the separate financial statements (Equity Method in Separate Financial Statements (Amendments to IAS 27)).

Content enhancement – making compliance easier

The following areas of Probe MMX were impacted:

y 10.20 Engagement evaluation. Added a question to determine whether the entity is a Public Interest Entity (PIE). To inter alia determine whether audit tenure should be disclosed in the Auditor’s Report.

y Management Override of Controls

� 11.40 Fraud risk assessment. The fraud risk relating to management override of controls was amended to include consideration of the three circumstances when ISA 240.32 requires the auditor to design and perform audit procedures, namely

○Testing the appropriateness of journal entries. ○Review accounting estimates for biases. ○Review the business rationale of significant transactions that are outside the normal course of business.

� 10.50 Gathering of information. A procedure was added to prompt the auditor to consider whether there is a significant transaction outside the normal course of business (other than with related parties). Guidance

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was added to remind the auditor that when such a transaction is identified, the auditor should evaluate the business rationale of the transaction as required by ISA 240.32.

� 11.20 Inherent risk assessment. Guidance text was added to remind the auditor to review the accounting estimates for biases and evaluate whether the circumstances producing the bias represent a risk of material misstatement due to fraud. When such an instance is identified, a significant risk should be recorded.

� 11.60 Risk assessment at assertion level/Other/Accounting records. Per ISA 240.31 the override of controls, which include journal entries, is a risk of material misstatement due to fraud and therefore is a significant risk. The aforementioned risk is now prepopulated in the template.

� 73.10 Accounting records/Journal entries and year-end adjustments. The required procedure was amended to include the testing of a sample of other non-material yearend journals.

y 60.10 Revenue. The completeness procedure was amended to clarify that the auditor is required to follow the selection of transactions through to the debtor’s account in the debtor ledger and ensure that it was allocated to the correct debtor.

y 65.10 Payroll. A procedure was added and another edited to check submission of statutory returns and calculation of statutory deductions respectively.

y 02.80 EQCR Checklist. A procedure was amended to prompt the EQCR that the review must be completed prior to the issue of the audit report and to document it as such.

y 20.10 Property, plant and equipment. The procedure to test completeness of Property, plant and equipment, i.e. the physical assets test, was included under required procedures.

The following areas of Probe MMX Recognition and Measurement (IFRS) were impacted: y 20.10 Property, plant and equipment. The procedure relating to impairment was amended to indicate the

timing of the assessment by management in accordance with IAS 36. y 23.10 Intangible Assets. Procedures relating to amortisation and impairment were amended to indicate the

timing of the assessment by management in accordance with IAS 38 and IAS 36 respectively. y 60.10 Revenue. Additional procedures relating to initial recognition of revenue and revenue received as an

agent on behalf of others were added.

The following areas of Probe MMX Recognition and Measurement (IFRS for SME) were impacted: y 60.10 Revenue. Additional procedures relating to initial recognition of revenue and revenue received as an

agent on behalf of others were added.

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Section B: Detailed Probe MMX compliance changes (major changes)

Planning

10.20 Engagement Evaluation (major change - compliance)

Included a procedure to elect early adoption of the new and revised auditor reporting standards as well as the conforming amendments to other ISAs.

Extract relevant to Large and Small Profile

When the new and revised Auditor Reporting standards is relevant based on the year-end of the auditee or when early adoption has been elected (in 10.20), the auditor will be required to answer a question whether Key Audit Matters will be presented in the auditor’s report. Guidance has been provided to indicate in which instances the KAM is mandatory.

When the entity type is selected as “listed”, the answer to the question will be populated.

Added a question to determine whether the entity is a Public Interest Entity (PIE). The procedure is only applicable when the country of incorporation is selected as South Africa.


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10.21 Engagement letter (major change - compliance)

The content of the engagement letter was aligned with the Example of an Audit Engagement Letter included as per Appendix 1 in the revised ISA 210, agreeing the Terms of Audit Engagements.

Inserted a paragraph with regards to the requirement for the auditor to communicate key audit matters in the auditor’s report in accordance with ISA 701. The paragraph will by default be switched on, even in the circumstance when the auditor is not required to communicate key audit mattersISA 210 states that it may be helpful for the auditor to make reference in the terms of the audit engagement to the possibility of communicating key audit matters in the auditor’s report. The user is able to hide the paragraph.


Content in the “Responsibilities of management” paragraph was edited to request management to provide information relevant to the preparation of the financial statements, including information relating to disclosure.

10.30 Discussions with those Charged with Governance (major change - compliance)

The questions to those charged with governance and/or management relating to obtaining an understanding of the accounting policies, estimates and significant, unusual and complex transactions, were edited and added to emphasize that the understanding should address disclosures as well as changes in the accounting framework, policies and disclosures.

Extract relevant to Small Profile (content of Large Profile is similar)

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Procedures were edited to determine the assessment by those charged with governance of the risk that the financial statements, including the disclosure, may be materially misstated due to fraud.

Extract relevant to Small Profile Extract relevant to Large Profile

10.50 Gathering Information (major change - compliance)

In the instance where KAM will be presented in the Auditor’s report (as indicated on 10.20), a procedure is inserted to consider whether any KAM’s were identified in the prior period. A definition of KAM is provided as well as guidance on what should be considered as a KAM.


The Record Risk Button has been updated to include the functionality to record a KAM throughout the file.

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The information recorded will be summarised in a new work program 02.55 “Key Audit Matters.

A procedure was added to consider whether there was instances in the prior year where audit procedures were difficult to perform, including procedure relating to disclosure.

A procedure was added to consider whether there was significant transactions (other than with related parties) that are outside the normal course of business.


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10.60 Overall materiality assessment (major change - compliance)

Added guidance with regards to what information is considered to be qualitatively material.


11.20 Inherent risk assessment (major change - compliance)

Procedures relating to obtaining an understanding of the nature of the entity, including accounting policies, were edited to emphasize that the understanding should address also disclosure.

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Examples of disclosures that will have qualitative aspects and that may be relevant when assessing the risks of material misstatements are included in the Large Profile:

Extract relevant to Large Profile

11.40 Fraud risk assessment (major change - compliance)

Inserted an additional consideration under “opportunity” to determine whether there is an opportunity for intentional misstatement of disclosures that may constitute fraud.

Extract relevant to Large Profile Extract relevant to Small Profile

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The prepopulated risk, "Management override of controls", were amended to include the three circumstances when ISA 240.32 requires the auditor to design and perform audit procedures. Proposed audit procedures for the three instances were included as guidance. The auditor needs to consider the relevance and completeness of these procedures .

11.50 Control activities design and implementation (major change - compliance)

New prompts were added to “Other/Financial Statement Preparation” to emphasize that the understanding obtained should include the process management used to identify and prepare the disclosure in the financial statements.


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Examples of information obtained from outside of the general and subsidiary ledgers is provided.


11.60 Risk assessment at assertion level (Major change – compliance)

The risk of material misstatement of financial statements due to fraud with journals is prepopulated in the template.

12.30 Planning Memorandum (Major change – compliance)

The paragraph relating to “Communication to {those charged with governance}” about the planned scope and timing of the audit was updated to include the communication of significant risks identified during the planning process. ISA 260 par 15 requires that the auditor communicate to those charged with governance the planned scope and timing of the audit, which include communication of the significant risks identified by the auditor.

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The section relating to “Audit Strategy / Characteristics and scope of the engagement / Financial reporting framework” was edited to include consideration of disclosures

Extract relevant to Large Profile

Combine the sentences. to read: "The section relating to “Discussions amongst engagement team members / Development and changes since the last audit” and “Discussions amongst engagement team members / Susceptibility of the financial statements to material misstatement” was edited to include consideration of disclosures."

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Execution Work Programs (Major change - compliance)

The conclusion paragraph was updated to consider whether a KAM that was identified in the relevant section may require communication to those charged with governance and presentation in the audit report. The aforementioned paragraph will appear in the instances where it was identified that Key Audit Matters will be presented in the audit report in 10.20 “Engagement Evaluation”.If Key Audit Matters were identified and the question was answered as yes, a pop-up message will appear to prompt the user to record the Key Audit Matter using the Record Risk button.


80.10 Financial Statement Preparation (Major change – compliance)

Inserted new procedures and amended existing procedures in the paragraph “Supplementary unaudited information and other information in documents containing audited financial statements” relating to the auditor’s

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responsibility to review said information and respond to inconsistencies between the unaudited information and other information included in documents in the audited financial statements.


Added an instruction to provide examples of disclosure that will have qualitative aspects (included for Large Profile).

Finalisation 02.00 Partner Sign-off (major change - compliance)

A new procedure with regards to the identification, communication and presentation of KAMs was inserted.


02.55 Key Audit Matter (NEW) (Major change – compliance)

A new work program was added that summarises Key Audit Matters recorded during the planning or execution phase using the “Risk Record” button. The detail of the Key Audit Matters will pull through to 02.90. The work program requires the auditor to indicate which of the potential KAM’s will be presented in the Auditor’s Report and which will not be presented supported by a reason for not presenting it.


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02.20 Going Concern Conclusion (Major change – compliance)

In the instance where the auditor concluded that ‘Material uncertainty relating to going concern exists but adequate disclosure is made in the financial statements”, the proposed Audit Opinion was changed

from “We should issue an unqualified opinion with respect to the applicability of the going concern basis of accounting, with an emphasis of matter paragraph.”

to “We should issue an unqualified opinion with respect to the applicability of the going concern basis of accounting, with a separate section in the audit report under the heading ‘Material Uncertainty Related to Going Concern.”


02.40 Evaluation of misstatements (Major change – compliance)

Added a new tab to enable the user to record and evaluate disclosure and presentation misstatements.


Procedures in the conclusion section was edited to include consideration for the omission of disclosure.


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02.80 EQCR Checklist (Major change – compliance)

A new procedure with regards to the identification, communication and presentation of KAMs was inserted. The EQCR procedure, including the additional procedure, only applies to the Large Profile.

The aforementioned paragraph will appear in the instances where it was identified that KAM’s will be presented in the audit report in 10.20 “Engagement Evaluation”.


02.90 Report to Management and Those Charged with Governance (Major change – compliance)

y The following prompts were inserted: y Explain the circumstances that affect the form and content of the auditor’s report, for example modification to

the audit report. y Explain the emphasis of matter or other matter paragraph that is expected to be included in the audit report.

A paragraph relating to KAM’s has been inserted. The detail of KAM recorded in 02.55, Key Audit Matters.


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Probe MMX Premium

02.50 Consideration of Audit Report (major change - compliance)

The content of the work program was changed significantly to enable the auditor to determine whether the audit report meets the format and requirements of the revised Auditor’s Report effective for financial periods on or after 15 December 2016. Inter alia it includes procedures relating to: y Key Audit Matters, y Going Concern - Material Uncertainty Related to Going Concern, and y Other information.

The results recorded in 02.20 “Going Concern” pull through to 02.50 “Consideration of audit report”. For example, conclusion was such that uncertainty relating to going concern exists but adequate disclosure is made in the financial statements (refer 02.20 below):

The relevant procedures relating to “Material Uncertainty Related to Going Concern” will be populated in 02.50 “Consideration of audit report”.

02.70 Manager’s final checklist (major change - compliance)

Added two new procedures to check whether: y KAM have been determined and communicated in the auditor’s report in instances where it is relevant.

y Material inconsistencies exist between other information and the financial statements or our knowledge of the client.

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Probe MMX Recog & Measure (IFRS)

24.10 Group Companies (major change - compliance)

Included the option of using the equity method when considering whether the interests in jointly controlled operations, subsidiaries, associates and joint ventures are correctly accounted for in the separate financial statements of the entity.

The aforementioned equity method option will be included in the work program based on the year end of the auditee, i.e. if the year-end is on or after 31 December 2016, the procedure will appear. For earlier year ends, the equity method option will not be included.

20.10 Property, plant and equipment (major change - compliance)

y Amended the following procedure (indicated in italics) under Impairment � Ensure that management assessed at the end of each reporting period whether or not there is any indication

that an asset or group of assets may be impaired (IAS36.9&12). (8)

23.10 Intangible Assets (major change - compliance)

y Amended the following procedures (indicated in italics) testing material amortisation � The useful life of any intangible assets that arises from contractual or other legal rights does not exceed the

period of the contractual or other legal rights or the renewable period, but may be shorter depending on the period over which the entity expects to use the asset. (IAS38.94)

� The amortisation method reflects the pattern in which the asset’s future economic benefits are expected to be consumed and that changes in use are reflected in changes in the amortisation method. If pattern cannot be determined reliably the straight line method shall be used.

� The entity reviewed the amortisation period and method for infinite life intangible assets at least annually. y Amended the following procedure (indicated in italics) under material acquisitions

� Ensure that intangible assets arising from development, or from the development phase of a project has only been recognised if management can demonstrate technical feasibility, intention to complete, ability to use and how economic benefits will be generated, the availability of adequate technical financial and other resources to complete the development and its ability to measure reliably the expenditure attributable to the intangible asset during its development. (IAS38.57).

y Amended the following procedure (indicated in italics) under Impairment � Ensure that management assessed at the end of each reporting period whether or not there is any indication

that an asset or group of assets may be impaired (IAS36.9&12).

60.10 Revenue (major change – compliance). The following procedures were added:

y Ensure that revenue is measured as the gross inflows received or receivable, net of any trade discounts, settlement discounts and volume rebates.

y Ensure that revenue received as an agent on behalf of others only includes the commission received. The

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procedure is activated by ticking “Revenue received on behalf of others (i.e. as an agent) “ in 10.51 Types and Volume of Transactions.

y Ensure that any other amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not recorded as revenue.

Probe MMX Recog & Measure (IFRS for SME)

60.10 Revenue (major change – compliance). The following procedures were added:

y Ensure that revenue is measured as the gross inflows received or receivable, net of any trade discounts, settlement discounts and volume rebates.

y Ensure that revenue received as an agent on behalf of others only includes the commission received. The procedure is activated by ticking “Revenue received on behalf of others (i.e. as an agent)" in 10.51 Types and Volume of Transactions.

y Ensure that any other amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not recorded as revenue.

Other Changes to Probe MMX, Probe MMX Premium, Probe MMX Recog & Measurement (IFRS and IFRS for SME) (minor changes)

y To improve the user experience, all the work programs have been updated. Inter alia, the following was improved: � Removed duplicated procedures. � Added procedures to make compliance easier. � C hanged the placement of procedure to create a more logical flow and to enhance consistency between

various work programs. � Resolved bugs.

The firm and/or user will have an option to insert the documents that only contains minor changes. In this instance client data and customization in the work program will be lost.The CaseView document version number will not change when the relevant document only contains minor changes. The CaseView document version number will only be updated to the 2016 version number when the relevant document contains major changes.

To insert work programs with minor changes, follow the steps below:

1. Locate the position of the current document in the Document Manager:

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2. Click on Document in the Ribbon, and select From Library. Select the library applicable to your engagement:

3. Locate the document you wish to insert, and click on Add:

4. The updated document will now be available below the original document:

5. Delete original document and renumber the updated document.

Probe Compilations

06.10 Letter of representation

A management representation letter for a compilation engagement was added.

06.20 Compilation engagement evaluation

The option “SA GAAP” has been removed from the financial reporting framework dropdown box.

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ANNEXURE ASummary of documents being updated

The following existing documents will automatically be replaced. It includes major changes that are either compliance changes or improvements to make compliance easier. New version numbers will be assigned to these documents.

Planning documents10.21 Engagement letter

Work Programs20.10 Property, plant and equipment work program23.10 Intangible assets work program24.10 Group companies work program60.10 Revenue work program65.10 Employee costs work program73.10 Accounting records work program80.10 Financial statement preparation work program

Finalisation document02.00 Partner sign-off02.20 Going concern conclusion02.40 Evaluation of misstatements02.50 Consideration of audit report (premium only)02.55 Key audit matters02.70 Manager’s final checklist (premium only)02.80 EQCR checklist02.90 Report to management and those charged with governance

Compilation documents06.10 Compilation letter of representation

The following existing documents will automatically be replaced due to compliance change. New version numbers will be assigned to these documents. The client data captured in these documents will not be lost in the engagement files as it is written to a database.

02.10 Subsequent events work program10.20 Engagement evaluation10.30 Discussions with those charged with governance10.50 Gathering information10.60 Overall materiality assessment10.70 Areas that are likely to be misstated11.10 Risk analysis summary11.20 Inherent risk assessment11.30 Control risk assessment

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11.40 Fraud risk assessment11.50 Control activities design and implementation11.60 Risk assessment at assertion level11.61 Controls over significant risk12.20 Audit plan and strategy12.21 Using internal audit12.30 Planning memorandum90.10 Blank audit program90.20 Substantive testing worksheet90.30 Controls testing worksheet90.40 Focused enquiries

The KAM procedure in the conclusion paragraph will be inserted in the following documents, but the document will not be replaced. Therefore the document version will NOT change, unless the user want to update the document to the latest version.

21.10 Investment property work program22.10 Agriculture work program25.10 Other financial assets work program27.10 Other assets work program30.10 Inventories work program31.10 Trade and other receivables work program32.10 Cash and cash equivalents work program40.10 Capital and statutory work program41.10 Other financial liabilities work program43.10 Other liabilities work program50.10 Taxes and levies work program51.10 Trade and other payables work program52.10 Provisions work program61.10 Investment and finance income work program62.10 Cost of sales work program64.10 Other income work program66.10 Other expenses work program67.10 Finance costs work program68.10 Disposal groups and discontinued operations work program71.10 Related parties work program72.10 Commitments and contingencies work program74.10 Opening balances and comparatives work program

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ANNEXURE BProbe MMX Audit: Key Audit Matters

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November 2016 - · PDF fileDisclosure Initiative (Amendments to IAS 1), ... 6.3 Changes to...

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Transcript of November 2016 - · PDF fileDisclosure Initiative (Amendments to IAS 1), ... 6.3 Changes to...