Audit and Assurance Practice Exam

Which of the following is NOT a change in the audit report due to the new AS 3101 reporting standard?

1. A statement that the financial statements are the responsibility of management

2. An emphasis on auditor independence

3. A clear opinion on internal controls

4. Inclusion of the audit tenure

The correct answer is: A statement that the financial statements are the responsibility of management

The correct answer highlights an aspect of audit reporting that has remained consistent despite the introduction of the new AS 3101 reporting standard. The statement that the financial statements are the responsibility of management has been a standard component of audit reports historically. This fundamental principle reflects the longstanding notion that management is accountable for the preparation and fair presentation of the financial statements in accordance with applicable financial reporting frameworks. In contrast, several changes were incorporated with the new AS 3101 standard that aim to enhance the clarity and transparency of the audit report. The emphasis on auditor independence and the inclusion of audit tenure represent new focuses in the report, providing stakeholders with a clearer picture of the auditor's objectivity and the relationship length with the client — both key factors in assessing the integrity and credibility of the audit process. Additionally, the clear opinion on internal controls reflects a more robust consideration of the control environment, which is crucial for understanding the effectiveness of financial reporting. Overall, the unwavering characteristic of management's responsibility for financial statements reinforces the idea that while audit reporting has evolved to offer more detailed insights, core responsibilities and principles have not been altered by the new standard.