1. Implementation of IFRS 19

The introduction of IFRS 19: Subsidiaries without Public Accountability: Disclosures represents a notable step towards reducing the financial reporting burden for many private companies.

Its primary benefit is the creation of a tailored, standalone, voluntary disclosure standard for eligible subsidiaries (as defined in IFRS 10 Consolidated Financial Statements), which are entities that are not publicly accountable and whose parent company prepares consolidated financial statements compliant with IFRS, available for public use. By providing a prescribed, simplified set of disclosures, IFRS 19 eliminates the complexity, time and cost involved of having to wade through the full IFRS framework, which is increasingly designed with large, complex public entities in mind. IFRS 19 will enhance comparability among private companies, as they will all be applying the same reduced disclosure requirements, and allows stakeholders to focus on the most relevant information, without the clutter of immaterial, public market-focused disclosures, enhancing the overall utility of the reports.

The most significant disadvantage is the ‘all-or-nothing’ adoption choice; companies must apply the disclosure standard in its entirety, and cannot pick and choose which simplified disclosures to adopt. The absence of flexibility may pose a limitation for companies that consider specific, full IFRS disclosures to be of greater significance to their stakeholders. In addition, users should recognise that there are costs and efforts associated with the initial implementation.

IFRS 19 is effective for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. As audit clients may choose to adopt this standard early, auditors should start their preparations by updating audit programmes, disclosure checklists and working templates.

2. Partner signoffs on engagement files

There is often a lack of evidence of engagement partner signoffs on engagement files. This raises the question of whether the engagement partner was adequately involved at appropriate times throughout the engagement, as required by ISA 220 (Revised). The partner may have been adequately involved, but without appropriate sign-off on key working papers on file, and there is very little evidence to support compliance with the requirements of ISA 220 (Revised).

Engagement partners must be involved in key areas throughout the audit, and sign off the relevant working papers on file to ensure that there is unmistakable evidence of their involvement during the pre-engagement, planning, fieldwork and completion stages of the audit.